Correlation Between Petroleo Brasileiro and Blackrock International

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

Diversification Opportunities for Petroleo Brasileiro and Blackrock International

0.07

Correlation Coefficient

Petroleo Brasileiro  Blackrock International

Significant diversification

The 3 months correlation between Petroleo and Blackrock is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Blackrock International Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock International 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 Blackrock International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock International has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Blackrock International go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Blackrock International

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.93 times more return on investment than Blackrock International. However, Petroleo Brasileiro is 1.93 times more volatile than Blackrock International Index. It trades about 0.14 of its potential returns per unit of risk. Blackrock International Index is currently generating about 0.17 per unit of risk. If you would invest  1,261  in Petroleo Brasileiro Petrobras on December 27, 2024 and sell it today you would earn a total of  178.00  from holding Petroleo Brasileiro Petrobras or generate 14.12% 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.  Blackrock International Index

Petroleo Brasileiro

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Petroleo Brasileiro Petrobras are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Petroleo Brasileiro reported solid returns over the last few months and may actually be approaching a breakup point.

Blackrock International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock International Index are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Blackrock International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Petroleo Brasileiro and Blackrock International

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

The idea behind Petroleo Brasileiro Petrobras and Blackrock International Index 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.