Correlation Between Petroleo Brasileiro and Tema Electrification
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Tema Electrification 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 Tema Electrification 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 Tema Electrification ETF, you can compare the effects of market volatilities on Petroleo Brasileiro and Tema Electrification 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 Tema Electrification. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Tema Electrification.
Diversification Opportunities for Petroleo Brasileiro and Tema Electrification
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Petroleo and Tema is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Tema Electrification ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tema Electrification ETF 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 Tema Electrification. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tema Electrification ETF has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Tema Electrification go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Tema Electrification
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.46 times more return on investment than Tema Electrification. However, Petroleo Brasileiro is 1.46 times more volatile than Tema Electrification ETF. It trades about 0.07 of its potential returns per unit of risk. Tema Electrification ETF is currently generating about -0.08 per unit of risk. If you would invest 758.00 in Petroleo Brasileiro Petrobras on October 22, 2024 and sell it today you would earn a total of 614.00 from holding Petroleo Brasileiro Petrobras or generate 81.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 6.25% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Tema Electrification ETF
Performance |
| Timeline |
| Petroleo Brasileiro |
| Tema Electrification ETF |
Petroleo Brasileiro and Tema Electrification Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Tema Electrification
The main advantage of trading using opposite Petroleo Brasileiro and Tema Electrification positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Tema Electrification 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 Tema Electrification will offset losses from the drop in Tema Electrification's long position.| Petroleo Brasileiro vs. Ecopetrol SA ADR | Petroleo Brasileiro vs. Equinor ASA ADR | Petroleo Brasileiro vs. Eni SpA ADR | Petroleo Brasileiro vs. Cenovus Energy |
| Tema Electrification vs. iShares Dividend and | Tema Electrification vs. Martin Currie Sustainable | Tema Electrification vs. VictoryShares THB Mid | Tema Electrification vs. Mast Global Battery |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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