Correlation Between TotalEnergies and Petrleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both TotalEnergies and Petrleo 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 TotalEnergies and Petrleo Brasileiro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TotalEnergies SE and Petrleo Brasileiro SA, you can compare the effects of market volatilities on TotalEnergies and Petrleo 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 TotalEnergies with a short position of Petrleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of TotalEnergies and Petrleo Brasileiro.
Diversification Opportunities for TotalEnergies and Petrleo Brasileiro
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TotalEnergies and Petrleo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and Petrleo Brasileiro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrleo Brasileiro and TotalEnergies 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 TotalEnergies SE are associated (or correlated) with Petrleo Brasileiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrleo Brasileiro has no effect on the direction of TotalEnergies i.e., TotalEnergies and Petrleo Brasileiro go up and down completely randomly.
Pair Corralation between TotalEnergies and Petrleo Brasileiro
Assuming the 90 days trading horizon TotalEnergies is expected to generate 9.1 times less return on investment than Petrleo Brasileiro. But when comparing it to its historical volatility, TotalEnergies SE is 8.97 times less risky than Petrleo Brasileiro. It trades about 0.22 of its potential returns per unit of risk. Petrleo Brasileiro SA is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 27,250 in Petrleo Brasileiro SA on August 24, 2024 and sell it today you would earn a total of 1,750 from holding Petrleo Brasileiro SA or generate 6.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TotalEnergies SE vs. Petrleo Brasileiro SA
Performance |
| Timeline |
| TotalEnergies SE |
| Petrleo Brasileiro |
TotalEnergies and Petrleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TotalEnergies and Petrleo Brasileiro
The main advantage of trading using opposite TotalEnergies and Petrleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TotalEnergies position performs unexpectedly, Petrleo 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 Petrleo Brasileiro will offset losses from the drop in Petrleo Brasileiro's long position.| TotalEnergies vs. Verizon Communications | TotalEnergies vs. Cognizant Technology Solutions | TotalEnergies vs. Southern Copper | TotalEnergies vs. Hoteles City Express |
| Petrleo Brasileiro vs. FIBRA Storage | Petrleo Brasileiro vs. Verizon Communications | Petrleo Brasileiro vs. Samsung Electronics Co | Petrleo Brasileiro vs. Hoteles City Express |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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