Correlation Between Petroleo Brasileiro and Fantagio Corp
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Fantagio Corp 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 Petroleo Brasileiro and Fantagio Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petroleo Brasileiro Petrobras and Fantagio Corp, you can compare the effects of market volatilities on Petroleo Brasileiro and Fantagio Corp 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 Petroleo Brasileiro with a short position of Fantagio Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Fantagio Corp.
Diversification Opportunities for Petroleo Brasileiro and Fantagio Corp
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Petroleo and Fantagio is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Fantagio Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fantagio Corp and Petroleo Brasileiro 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 Petroleo Brasileiro Petrobras are associated (or correlated) with Fantagio Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fantagio Corp has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Fantagio Corp go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Fantagio Corp
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.61 times more return on investment than Fantagio Corp. However, Petroleo Brasileiro Petrobras is 1.63 times less risky than Fantagio Corp. It trades about -0.05 of its potential returns per unit of risk. Fantagio Corp is currently generating about -0.24 per unit of risk. If you would invest 1,403 in Petroleo Brasileiro Petrobras on September 18, 2024 and sell it today you would lose (74.00) from holding Petroleo Brasileiro Petrobras or give up 5.27% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 73.02% |
Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Fantagio Corp
Performance |
Timeline |
Petroleo Brasileiro |
Fantagio Corp |
Petroleo Brasileiro and Fantagio Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Petroleo Brasileiro and Fantagio Corp
The main advantage of trading using opposite Petroleo Brasileiro and Fantagio Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Fantagio Corp 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 Fantagio Corp will offset losses from the drop in Fantagio Corp's long position.Petroleo Brasileiro vs. Ecopetrol SA ADR | Petroleo Brasileiro vs. Equinor ASA ADR | Petroleo Brasileiro vs. Eni SpA ADR | Petroleo Brasileiro vs. Cenovus Energy |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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