Correlation Between Petroleo Brasileiro and Kansas Tax

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

Diversification Opportunities for Petroleo Brasileiro and Kansas Tax

0.72

Correlation Coefficient

Petroleo Brasileiro  Kansas Tax

Poor diversification

The 3 months correlation between Petroleo and Kansas is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and The Kansas Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kansas Tax 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 Kansas Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kansas Tax has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Kansas Tax go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Kansas Tax

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Kansas Tax. In addition to that, Petroleo Brasileiro is 8.92 times more volatile than The Kansas Tax Free. It trades about -0.19 of its total potential returns per unit of risk. The Kansas Tax Free is currently generating about -0.24 per unit of volatility. If you would invest  1,840  in The Kansas Tax Free on September 27, 2024 and sell it today you would lose (19.00) from holding The Kansas Tax Free or give up 1.03% of portfolio value over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  The Kansas Tax Free

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.

Kansas Tax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Kansas Tax Free has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Kansas Tax 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 Kansas Tax

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

The idea behind Petroleo Brasileiro Petrobras and The Kansas Tax Free 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.