Correlation Between PetroShale and Petrus Resources
Can any of the company-specific risk be diversified away by investing in both PetroShale and Petrus Resources 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 PetroShale and Petrus Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PetroShale and Petrus Resources, you can compare the effects of market volatilities on PetroShale and Petrus Resources 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 PetroShale with a short position of Petrus Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroShale and Petrus Resources.
Diversification Opportunities for PetroShale and Petrus Resources
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PetroShale and Petrus is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding PetroShale and Petrus Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrus Resources and PetroShale 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 PetroShale are associated (or correlated) with Petrus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrus Resources has no effect on the direction of PetroShale i.e., PetroShale and Petrus Resources go up and down completely randomly.
Pair Corralation between PetroShale and Petrus Resources
Assuming the 90 days horizon PetroShale is expected to under-perform the Petrus Resources. In addition to that, PetroShale is 1.31 times more volatile than Petrus Resources. It trades about -0.23 of its total potential returns per unit of risk. Petrus Resources is currently generating about 0.01 per unit of volatility. If you would invest 104.00 in Petrus Resources on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Petrus Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
PetroShale vs. Petrus Resources
Performance |
| Timeline |
| PetroShale |
| Petrus Resources |
PetroShale and Petrus Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroShale and Petrus Resources
The main advantage of trading using opposite PetroShale and Petrus Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroShale position performs unexpectedly, Petrus Resources 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 Petrus Resources will offset losses from the drop in Petrus Resources' long position.| PetroShale vs. Petroleo Brasileiro Petrobras | PetroShale vs. Equinor ASA ADR | PetroShale vs. Eni SpA ADR | PetroShale vs. YPF Sociedad Anonima |
| Petrus Resources vs. Petroleo Brasileiro Petrobras | Petrus Resources vs. Equinor ASA ADR | Petrus Resources vs. Eni SpA ADR | Petrus Resources vs. YPF Sociedad Anonima |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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