Correlation Between Transportadora and Petroleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both Transportadora and Petroleo Brasileiro 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 Transportadora and Petroleo Brasileiro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transportadora de Gas and Petroleo Brasileiro Petrobras, you can compare the effects of market volatilities on Transportadora and Petroleo Brasileiro 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 Transportadora with a short position of Petroleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and Petroleo Brasileiro.
Diversification Opportunities for Transportadora and Petroleo Brasileiro
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transportadora and Petroleo is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Petroleo Brasileiro Petrobras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petroleo Brasileiro and Transportadora 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 Transportadora de Gas are associated (or correlated) with Petroleo Brasileiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petroleo Brasileiro has no effect on the direction of Transportadora i.e., Transportadora and Petroleo Brasileiro go up and down completely randomly.
Pair Corralation between Transportadora and Petroleo Brasileiro
Considering the 90-day investment horizon Transportadora is expected to generate 2.92 times less return on investment than Petroleo Brasileiro. In addition to that, Transportadora is 3.11 times more volatile than Petroleo Brasileiro Petrobras. It trades about 0.04 of its total potential returns per unit of risk. Petroleo Brasileiro Petrobras is currently generating about 0.41 per unit of volatility. If you would invest 1,258 in Petroleo Brasileiro Petrobras on October 21, 2024 and sell it today you would earn a total of 114.00 from holding Petroleo Brasileiro Petrobras or generate 9.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transportadora de Gas vs. Petroleo Brasileiro Petrobras
Performance |
| Timeline |
| Transportadora de Gas |
| Petroleo Brasileiro |
Transportadora and Petroleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportadora and Petroleo Brasileiro
The main advantage of trading using opposite Transportadora and Petroleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora position performs unexpectedly, Petroleo Brasileiro 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 Petroleo Brasileiro will offset losses from the drop in Petroleo Brasileiro's long position.| Transportadora vs. Petroleo Brasileiro Petrobras | Transportadora vs. Ecopetrol SA ADR | Transportadora vs. Petrleo Brasileiro SA | Transportadora vs. Equinor ASA ADR |
| Petroleo Brasileiro vs. Ecopetrol SA ADR | Petroleo Brasileiro vs. Equinor ASA ADR | Petroleo Brasileiro vs. Eni SpA ADR | Petroleo Brasileiro vs. Cenovus Energy |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |