Correlation Between YPF Sociedad and Petróleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both YPF Sociedad and Petróleo 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 YPF Sociedad and Petróleo Brasileiro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YPF Sociedad Anonima and Petrleo Brasileiro SA, you can compare the effects of market volatilities on YPF Sociedad and Petróleo 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 YPF Sociedad with a short position of Petróleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of YPF Sociedad and Petróleo Brasileiro.
Diversification Opportunities for YPF Sociedad and Petróleo Brasileiro
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between YPF and Petróleo is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding YPF Sociedad Anonima and Petrleo Brasileiro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petróleo Brasileiro and YPF Sociedad 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 YPF Sociedad Anonima are associated (or correlated) with Petróleo Brasileiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petróleo Brasileiro has no effect on the direction of YPF Sociedad i.e., YPF Sociedad and Petróleo Brasileiro go up and down completely randomly.
Pair Corralation between YPF Sociedad and Petróleo Brasileiro
Considering the 90-day investment horizon YPF Sociedad Anonima is expected to generate 1.92 times more return on investment than Petróleo Brasileiro. However, YPF Sociedad is 1.92 times more volatile than Petrleo Brasileiro SA. It trades about 0.75 of its potential returns per unit of risk. Petrleo Brasileiro SA is currently generating about 0.24 per unit of risk. If you would invest 2,551 in YPF Sociedad Anonima on August 28, 2024 and sell it today you would earn a total of 1,375 from holding YPF Sociedad Anonima or generate 53.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
YPF Sociedad Anonima vs. Petrleo Brasileiro SA
Performance |
| Timeline |
| YPF Sociedad Anonima |
| Petróleo Brasileiro |
YPF Sociedad and Petróleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YPF Sociedad and Petróleo Brasileiro
The main advantage of trading using opposite YPF Sociedad and Petróleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YPF Sociedad position performs unexpectedly, Petróleo 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 Petróleo Brasileiro will offset losses from the drop in Petróleo Brasileiro's long position.| YPF Sociedad vs. National Fuel Gas | YPF Sociedad vs. Eni SpA ADR | YPF Sociedad vs. Ecopetrol SA ADR | YPF Sociedad vs. TotalEnergies SE ADR |
| Petróleo Brasileiro vs. Petroleo Brasileiro Petrobras | Petróleo Brasileiro vs. Equinor ASA ADR | Petróleo Brasileiro vs. Eni SpA ADR | Petróleo Brasileiro 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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