Correlation Between Petroleo Brasileiro and The Hartford
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and The Hartford 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 The Hartford 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 The Hartford International, you can compare the effects of market volatilities on Petroleo Brasileiro and The Hartford 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 The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and The Hartford.
Diversification Opportunities for Petroleo Brasileiro and The Hartford
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Petroleo and The is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and The Hartford International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Interna 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 The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Interna has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and The Hartford go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and The Hartford
Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 1.01 times less return on investment than The Hartford. In addition to that, Petroleo Brasileiro is 1.96 times more volatile than The Hartford International. It trades about 0.13 of its total potential returns per unit of risk. The Hartford International is currently generating about 0.25 per unit of volatility. If you would invest 1,772 in The Hartford International on December 29, 2024 and sell it today you would earn a total of 248.00 from holding The Hartford International or generate 14.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.39% |
Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. The Hartford International
Performance |
Timeline |
Petroleo Brasileiro |
Hartford Interna |
Petroleo Brasileiro and The Hartford Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Petroleo Brasileiro and The Hartford
The main advantage of trading using opposite Petroleo Brasileiro and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.Petroleo Brasileiro vs. Ecopetrol SA ADR | Petroleo Brasileiro vs. Equinor ASA ADR | Petroleo Brasileiro vs. Eni SpA ADR | Petroleo Brasileiro vs. Cenovus Energy |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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