Correlation Between Petroleo Brasileiro and Wam Capital
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Wam Capital 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 Wam Capital 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 Wam Capital, you can compare the effects of market volatilities on Petroleo Brasileiro and Wam Capital 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 Wam Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Wam Capital.
Diversification Opportunities for Petroleo Brasileiro and Wam Capital
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Petroleo and Wam is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Wam Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wam Capital 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 Wam Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wam Capital has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Wam Capital go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Wam Capital
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.88 times more return on investment than Wam Capital. However, Petroleo Brasileiro is 1.88 times more volatile than Wam Capital. It trades about 0.07 of its potential returns per unit of risk. Wam Capital is currently generating about 0.03 per unit of risk. If you would invest 779.00 in Petroleo Brasileiro Petrobras on September 13, 2024 and sell it today you would earn a total of 681.00 from holding Petroleo Brasileiro Petrobras or generate 87.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Wam Capital
Performance |
| Timeline |
| Petroleo Brasileiro |
| Wam Capital |
Petroleo Brasileiro and Wam Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Wam Capital
The main advantage of trading using opposite Petroleo Brasileiro and Wam Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Wam Capital 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 Wam Capital will offset losses from the drop in Wam Capital's long position.| Petroleo Brasileiro vs. Aquagold International | Petroleo Brasileiro vs. Thrivent High Yield | Petroleo Brasileiro vs. Morningstar Unconstrained Allocation | Petroleo Brasileiro vs. Via Renewables |
| Wam Capital vs. Australian Strategic Materials | Wam Capital vs. Stelar Metals | Wam Capital vs. Collins Foods | Wam Capital vs. Beston Global Food |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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