Correlation Between HF Sinclair and Petroleo Brasileiro

Can any of the company-specific risk be diversified away by investing in both HF Sinclair 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 HF Sinclair and Petroleo Brasileiro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HF Sinclair Corp and Petroleo Brasileiro Petrobras, you can compare the effects of market volatilities on HF Sinclair 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 HF Sinclair with a short position of Petroleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of HF Sinclair and Petroleo Brasileiro.

Diversification Opportunities for HF Sinclair and Petroleo Brasileiro

0.57

Correlation Coefficient

HF Sinclair  Petroleo Brasileiro

Very weak diversification

The 3 months correlation between DINO and Petroleo is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding HF Sinclair 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 HF Sinclair 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 HF Sinclair 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 HF Sinclair i.e., HF Sinclair and Petroleo Brasileiro go up and down completely randomly.

Pair Corralation between HF Sinclair and Petroleo Brasileiro

Given the investment horizon of 90 days HF Sinclair Corp is expected to under-perform the Petroleo Brasileiro. In addition to that, HF Sinclair is 1.46 times more volatile than Petroleo Brasileiro Petrobras. It trades about 0.0 of its total potential returns per unit of risk. Petroleo Brasileiro Petrobras is currently generating about 0.13 per unit of volatility. If you would invest  1,275  in Petroleo Brasileiro Petrobras on December 28, 2024 and sell it today you would earn a total of  163.00  from holding Petroleo Brasileiro Petrobras or generate 12.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

HF Sinclair Corp  vs.  Petroleo Brasileiro Petrobras

HF Sinclair Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days HF Sinclair Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, HF Sinclair is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Petroleo Brasileiro

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Petroleo Brasileiro Petrobras are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, Petroleo Brasileiro reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HF Sinclair and Petroleo Brasileiro

The main advantage of trading using opposite HF Sinclair and Petroleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF Sinclair 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.

The idea behind HF Sinclair Corp and Petroleo Brasileiro Petrobras pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.