Correlation Between Petroleo Brasileiro and Pacer Benchmark

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

Diversification Opportunities for Petroleo Brasileiro and Pacer Benchmark

0.57

Correlation Coefficient

Petroleo Brasileiro  Pacer Benchmark

Very weak diversification

The 3 months correlation between Petroleo and Pacer is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Pacer Benchmark Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Benchmark Indu 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 Pacer Benchmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Benchmark Indu has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Pacer Benchmark go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Pacer Benchmark

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.49 times more return on investment than Pacer Benchmark. However, Petroleo Brasileiro is 1.49 times more volatile than Pacer Benchmark Industrial. It trades about 0.02 of its potential returns per unit of risk. Pacer Benchmark Industrial is currently generating about -0.21 per unit of risk. If you would invest  1,444  in Petroleo Brasileiro Petrobras on September 12, 2024 and sell it today you would earn a total of  15.50  from holding Petroleo Brasileiro Petrobras or generate 1.07% return on investment over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  Pacer Benchmark Industrial

Petroleo Brasileiro

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Petroleo Brasileiro Petrobras are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pacer Benchmark Indu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacer Benchmark Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Petroleo Brasileiro and Pacer Benchmark

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

The idea behind Petroleo Brasileiro Petrobras and Pacer Benchmark Industrial 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..