Correlation Between Petroleo Brasileiro and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and SPDR SP 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 SPDR SP 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 SPDR SP Emerging, you can compare the effects of market volatilities on Petroleo Brasileiro and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and SPDR SP.
Diversification Opportunities for Petroleo Brasileiro and SPDR SP
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Petroleo and SPDR is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and SPDR SP Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Emerging 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Emerging has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and SPDR SP go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and SPDR SP
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 3.16 times more return on investment than SPDR SP. However, Petroleo Brasileiro is 3.16 times more volatile than SPDR SP Emerging. It trades about 0.17 of its potential returns per unit of risk. SPDR SP Emerging is currently generating about 0.22 per unit of risk. If you would invest 1,372 in Petroleo Brasileiro Petrobras on September 13, 2024 and sell it today you would earn a total of 88.00 from holding Petroleo Brasileiro Petrobras or generate 6.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. SPDR SP Emerging
Performance |
| Timeline |
| Petroleo Brasileiro |
| SPDR SP Emerging |
Petroleo Brasileiro and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and SPDR SP
The main advantage of trading using opposite Petroleo Brasileiro and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP'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 |
| SPDR SP vs. Freedom Day Dividend | SPDR SP vs. Franklin Templeton ETF | SPDR SP vs. iShares MSCI China | SPDR SP vs. Tidal Trust II |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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