Correlation Between Petroleo Brasileiro and Vest Large

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

Diversification Opportunities for Petroleo Brasileiro and Vest Large

-0.32

Correlation Coefficient

Petroleo Brasileiro  Vest Large

Very good diversification

The 3 months correlation between Petroleo and Vest is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Vest Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vest Large Cap 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 Vest Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vest Large Cap has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Vest Large go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Vest Large

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Vest Large. In addition to that, Petroleo Brasileiro is 1.23 times more volatile than Vest Large Cap. It trades about -0.19 of its total potential returns per unit of risk. Vest Large Cap is currently generating about 0.17 per unit of volatility. If you would invest  766.00  in Vest Large Cap on September 27, 2024 and sell it today you would earn a total of  39.00  from holding Vest Large Cap or generate 5.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Vest Large Cap

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 latest unsteady performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Vest Large Cap

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vest Large Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vest Large 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 Vest Large

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

The idea behind Petroleo Brasileiro Petrobras and Vest Large Cap 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.