Correlation Between Petrleo Brasileiro and Banco Alfa
Can any of the company-specific risk be diversified away by investing in both Petrleo Brasileiro and Banco Alfa 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 Banco Alfa 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 Banco Alfa de, you can compare the effects of market volatilities on Petrleo Brasileiro and Banco Alfa 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 Banco Alfa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrleo Brasileiro and Banco Alfa.
Diversification Opportunities for Petrleo Brasileiro and Banco Alfa
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Petrleo and Banco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Petrleo Brasileiro SA and Banco Alfa de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Alfa de 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 Banco Alfa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Alfa de has no effect on the direction of Petrleo Brasileiro i.e., Petrleo Brasileiro and Banco Alfa go up and down completely randomly.
Pair Corralation between Petrleo Brasileiro and Banco Alfa
Assuming the 90 days trading horizon Petrleo Brasileiro SA is expected to generate 1.54 times more return on investment than Banco Alfa. However, Petrleo Brasileiro is 1.54 times more volatile than Banco Alfa de. It trades about 0.08 of its potential returns per unit of risk. Banco Alfa de is currently generating about 0.05 per unit of risk. If you would invest 2,318 in Petrleo Brasileiro SA on August 31, 2024 and sell it today you would earn a total of 1,572 from holding Petrleo Brasileiro SA or generate 67.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Petrleo Brasileiro SA vs. Banco Alfa de
Performance |
| Timeline |
| Petrleo Brasileiro |
| Banco Alfa de |
Petrleo Brasileiro and Banco Alfa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrleo Brasileiro and Banco Alfa
The main advantage of trading using opposite Petrleo Brasileiro and Banco Alfa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrleo Brasileiro position performs unexpectedly, Banco Alfa 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 Banco Alfa will offset losses from the drop in Banco Alfa's long position.| Petrleo Brasileiro vs. Vale SA | Petrleo Brasileiro vs. Banco do Brasil | Petrleo Brasileiro vs. Banco Bradesco SA | Petrleo Brasileiro vs. Ita Unibanco Holding |
| Banco Alfa vs. Banco do Brasil | Banco Alfa vs. Banco Bradesco SA | Banco Alfa vs. Ita Unibanco Holding | Banco Alfa 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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