Correlation Between Petroleo Brasileiro and Trican Well
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Trican Well at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Petroleo Brasileiro and Trican Well into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petroleo Brasileiro Petrobras and Trican Well Service, you can compare the effects of market volatilities on Petroleo Brasileiro and Trican Well and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Petroleo Brasileiro with a short position of Trican Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Trican Well.
Diversification Opportunities for Petroleo Brasileiro and Trican Well
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Petroleo and Trican is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Trican Well Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trican Well Service and Petroleo Brasileiro is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Petroleo Brasileiro Petrobras are associated (or correlated) with Trican Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trican Well Service has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Trican Well go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Trican Well
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Trican Well. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 1.26 times less risky than Trican Well. The stock trades about -0.03 of its potential returns per unit of risk. The Trican Well Service is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 302.00 in Trican Well Service on September 3, 2024 and sell it today you would earn a total of 45.00 from holding Trican Well Service or generate 14.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Trican Well Service
Performance |
| Timeline |
| Petroleo Brasileiro |
| Trican Well Service |
Petroleo Brasileiro and Trican Well Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Trican Well
The main advantage of trading using opposite Petroleo Brasileiro and Trican Well positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Trican Well can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Trican Well will offset losses from the drop in Trican Well's long position.| Petroleo Brasileiro vs. SPACE | Petroleo Brasileiro vs. Ampleforth | Petroleo Brasileiro vs. ionet | Petroleo Brasileiro vs. KIN |
| Trican Well vs. STEP Energy Services | Trican Well vs. Koil Energy Solutions | Trican Well vs. TerraVest Industries | Trican Well vs. Source Energy Services |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the CEOs Directory module to screen CEOs from public companies around the world.
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