Correlation Between Petroleo Brasileiro and Assicurazioni Generali

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Assicurazioni Generali 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 Assicurazioni Generali 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 Assicurazioni Generali SpA, you can compare the effects of market volatilities on Petroleo Brasileiro and Assicurazioni Generali 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 Assicurazioni Generali. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Assicurazioni Generali.

Diversification Opportunities for Petroleo Brasileiro and Assicurazioni Generali

0.05

Correlation Coefficient

Petroleo Brasileiro  Assicurazioni Generali

Significant diversification

The 3 months correlation between Petroleo and Assicurazioni is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Assicurazioni Generali SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assicurazioni Generali 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 Assicurazioni Generali. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assicurazioni Generali has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Assicurazioni Generali go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Assicurazioni Generali

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Assicurazioni Generali. In addition to that, Petroleo Brasileiro is 1.42 times more volatile than Assicurazioni Generali SpA. It trades about -0.06 of its total potential returns per unit of risk. Assicurazioni Generali SpA is currently generating about 0.06 per unit of volatility. If you would invest  2,599  in Assicurazioni Generali SpA on September 23, 2024 and sell it today you would earn a total of  108.00  from holding Assicurazioni Generali SpA or generate 4.16% return on investment over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  Assicurazioni Generali SpA

Petroleo Brasileiro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petroleo Brasileiro Petrobras has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Petroleo Brasileiro is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Assicurazioni Generali

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Assicurazioni Generali SpA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Assicurazioni Generali is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Petroleo Brasileiro and Assicurazioni Generali

The main advantage of trading using opposite Petroleo Brasileiro and Assicurazioni Generali positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Assicurazioni Generali 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 Assicurazioni Generali will offset losses from the drop in Assicurazioni Generali's long position.

The idea behind Petroleo Brasileiro Petrobras and Assicurazioni Generali SpA 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.