Correlation Between Petrleo Brasileiro and Itasa Investimentos
Can any of the company-specific risk be diversified away by investing in both Petrleo Brasileiro and Itasa Investimentos 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 Petrleo Brasileiro and Itasa Investimentos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrleo Brasileiro SA and Itasa Investimentos, you can compare the effects of market volatilities on Petrleo Brasileiro and Itasa Investimentos 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 Petrleo Brasileiro with a short position of Itasa Investimentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrleo Brasileiro and Itasa Investimentos.
Diversification Opportunities for Petrleo Brasileiro and Itasa Investimentos
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petrleo and Itasa is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Petrleo Brasileiro SA and Itasa Investimentos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itasa Investimentos and Petrleo 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 Petrleo Brasileiro SA are associated (or correlated) with Itasa Investimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itasa Investimentos has no effect on the direction of Petrleo Brasileiro i.e., Petrleo Brasileiro and Itasa Investimentos go up and down completely randomly.
Pair Corralation between Petrleo Brasileiro and Itasa Investimentos
Assuming the 90 days trading horizon Petrleo Brasileiro SA is expected to generate 1.15 times more return on investment than Itasa Investimentos. However, Petrleo Brasileiro is 1.15 times more volatile than Itasa Investimentos. It trades about 0.35 of its potential returns per unit of risk. Itasa Investimentos is currently generating about -0.18 per unit of risk. If you would invest 3,766 in Petrleo Brasileiro SA on August 30, 2024 and sell it today you would earn a total of 480.00 from holding Petrleo Brasileiro SA or generate 12.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrleo Brasileiro SA vs. Itasa Investimentos
Performance |
| Timeline |
| Petrleo Brasileiro |
| Itasa Investimentos |
Petrleo Brasileiro and Itasa Investimentos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrleo Brasileiro and Itasa Investimentos
The main advantage of trading using opposite Petrleo Brasileiro and Itasa Investimentos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrleo Brasileiro position performs unexpectedly, Itasa Investimentos 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 Itasa Investimentos will offset losses from the drop in Itasa Investimentos' long position.| Petrleo Brasileiro vs. Vale SA | Petrleo Brasileiro vs. Petrleo Brasileiro SA | Petrleo Brasileiro vs. Banco do Brasil | Petrleo Brasileiro vs. Banco Bradesco SA |
| Itasa Investimentos vs. Banco do Brasil | Itasa Investimentos vs. Banco Bradesco SA | Itasa Investimentos vs. Ita Unibanco Holding | Itasa Investimentos vs. Petrleo Brasileiro SA |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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