Correlation Between Petroleo Brasileiro and Fidelity Advisor

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

Diversification Opportunities for Petroleo Brasileiro and Fidelity Advisor

-0.35

Correlation Coefficient

Petroleo Brasileiro  Fidelity Advisor

Very good diversification

The 3 months correlation between Petroleo and Fidelity is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Fidelity Advisor Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Fin 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 Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Fin has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Fidelity Advisor

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.83 times more return on investment than Fidelity Advisor. However, Petroleo Brasileiro is 1.83 times more volatile than Fidelity Advisor Financial. It trades about 0.07 of its potential returns per unit of risk. Fidelity Advisor Financial is currently generating about 0.07 per unit of risk. If you would invest  722.00  in Petroleo Brasileiro Petrobras on September 19, 2024 and sell it today you would earn a total of  562.00  from holding Petroleo Brasileiro Petrobras or generate 77.84% 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.  Fidelity Advisor Financial

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.

Fidelity Advisor Fin

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Financial are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Petroleo Brasileiro and Fidelity Advisor

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

The idea behind Petroleo Brasileiro Petrobras and Fidelity Advisor Financial 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.