Correlation Between Petroleo Brasileiro and Calvert Equity

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

Diversification Opportunities for Petroleo Brasileiro and Calvert Equity

0.02

Correlation Coefficient

Petroleo Brasileiro  Calvert Equity

Significant diversification

The 3 months correlation between Petroleo and Calvert is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Calvert Equity Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Equity Portfolio 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 Calvert Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Equity Portfolio has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Calvert Equity go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Calvert Equity

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 2.67 times more return on investment than Calvert Equity. However, Petroleo Brasileiro is 2.67 times more volatile than Calvert Equity Portfolio. It trades about 0.07 of its potential returns per unit of risk. Calvert Equity Portfolio is currently generating about 0.04 per unit of risk. If you would invest  768.00  in Petroleo Brasileiro Petrobras on October 15, 2024 and sell it today you would earn a total of  580.00  from holding Petroleo Brasileiro Petrobras or generate 75.52% 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.  Calvert Equity Portfolio

Petroleo Brasileiro

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Petroleo Brasileiro Petrobras are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Calvert Equity Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calvert Equity Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Calvert Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and Calvert Equity

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

The idea behind Petroleo Brasileiro Petrobras and Calvert Equity Portfolio 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..