Correlation Between Petroleo Brasileiro and Customers Bancorp

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

Diversification Opportunities for Petroleo Brasileiro and Customers Bancorp

-0.34

Correlation Coefficient

Petroleo Brasileiro  Customers Bancorp

Very good diversification

The 3 months correlation between Petroleo and Customers is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Customers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Customers Bancorp 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 Customers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Customers Bancorp has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Customers Bancorp go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Customers Bancorp

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Customers Bancorp. In addition to that, Petroleo Brasileiro is 1.29 times more volatile than Customers Bancorp. It trades about -0.1 of its total potential returns per unit of risk. Customers Bancorp is currently generating about 0.08 per unit of volatility. If you would invest  1,943  in Customers Bancorp on September 21, 2024 and sell it today you would earn a total of  53.00  from holding Customers Bancorp or generate 2.73% return on investment over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  Customers Bancorp

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.

Customers Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Customers Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Customers Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and Customers Bancorp

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

The idea behind Petroleo Brasileiro Petrobras and Customers Bancorp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.