Correlation Between XXL Energy and Petroleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both XXL Energy 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 XXL Energy and Petroleo Brasileiro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XXL Energy Corp and Petroleo Brasileiro Petrobras, you can compare the effects of market volatilities on XXL Energy 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 XXL Energy with a short position of Petroleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of XXL Energy and Petroleo Brasileiro.
Diversification Opportunities for XXL Energy and Petroleo Brasileiro
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between XXL and Petroleo is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding XXL Energy Corp and Petroleo Brasileiro Petrobras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petroleo Brasileiro and XXL Energy 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 XXL Energy Corp 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 XXL Energy i.e., XXL Energy and Petroleo Brasileiro go up and down completely randomly.
Pair Corralation between XXL Energy and Petroleo Brasileiro
If you would invest 1,379 in Petroleo Brasileiro Petrobras on August 28, 2024 and sell it today you would earn a total of 100.00 from holding Petroleo Brasileiro Petrobras or generate 7.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
XXL Energy Corp vs. Petroleo Brasileiro Petrobras
Performance |
| Timeline |
| XXL Energy Corp |
| Petroleo Brasileiro |
XXL Energy and Petroleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XXL Energy and Petroleo Brasileiro
The main advantage of trading using opposite XXL Energy and Petroleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XXL Energy 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.| XXL Energy vs. PHX Minerals | XXL Energy vs. Mexco Energy | XXL Energy vs. Granite Ridge Resources | XXL Energy vs. PrimeEnergy |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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