Correlation Between Petroleo Brasileiro and Intermediate Bond

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

Diversification Opportunities for Petroleo Brasileiro and Intermediate Bond

0.62

Correlation Coefficient

Petroleo Brasileiro  Intermediate Bond

Poor diversification

The 3 months correlation between Petroleo and Intermediate is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Intermediate Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Bond 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 Intermediate Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Bond has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Intermediate Bond go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Intermediate Bond

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Intermediate Bond. In addition to that, Petroleo Brasileiro is 10.9 times more volatile than Intermediate Bond Fund. It trades about -0.24 of its total potential returns per unit of risk. Intermediate Bond Fund is currently generating about -0.2 per unit of volatility. If you would invest  1,247  in Intermediate Bond Fund on September 24, 2024 and sell it today you would lose (9.00) from holding Intermediate Bond Fund or give up 0.72% of portfolio value over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  Intermediate Bond Fund

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.

Intermediate Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intermediate Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Intermediate Bond 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 Intermediate Bond

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

The idea behind Petroleo Brasileiro Petrobras and Intermediate Bond Fund 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.