Correlation Between Petroleo Brasileiro and Surge Energy
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Surge Energy 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 Surge Energy 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 Surge Energy, you can compare the effects of market volatilities on Petroleo Brasileiro and Surge Energy 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 Surge Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Surge Energy.
Diversification Opportunities for Petroleo Brasileiro and Surge Energy
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Petroleo and Surge is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Surge Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Energy 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 Surge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Energy has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Surge Energy go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Surge Energy
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.73 times more return on investment than Surge Energy. However, Petroleo Brasileiro Petrobras is 1.37 times less risky than Surge Energy. It trades about 0.15 of its potential returns per unit of risk. Surge Energy is currently generating about -0.07 per unit of risk. If you would invest 1,362 in Petroleo Brasileiro Petrobras on August 30, 2024 and sell it today you would earn a total of 74.00 from holding Petroleo Brasileiro Petrobras or generate 5.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Surge Energy
Performance |
| Timeline |
| Petroleo Brasileiro |
| Surge Energy |
Petroleo Brasileiro and Surge Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Surge Energy
The main advantage of trading using opposite Petroleo Brasileiro and Surge Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Surge Energy 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 Surge Energy will offset losses from the drop in Surge Energy'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 |
| Surge Energy vs. Yamaha Motor Co | Surge Energy vs. Nitto Denko Corp | Surge Energy vs. Farmers Merchants Bancorp | Surge Energy vs. Furukawa Electric Co |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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