Correlation Between Petroleo Brasileiro and Mfs New

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

Diversification Opportunities for Petroleo Brasileiro and Mfs New

-0.3

Correlation Coefficient

Petroleo Brasileiro  Mfs New

Very good diversification

The 3 months correlation between Petroleo and Mfs is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Mfs New Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs New Discovery 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 Mfs New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs New Discovery has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Mfs New go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Mfs New

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Mfs New. In addition to that, Petroleo Brasileiro is 1.59 times more volatile than Mfs New Discovery. It trades about -0.03 of its total potential returns per unit of risk. Mfs New Discovery is currently generating about 0.1 per unit of volatility. If you would invest  3,058  in Mfs New Discovery on September 15, 2024 and sell it today you would earn a total of  193.00  from holding Mfs New Discovery or generate 6.31% 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.  Mfs New Discovery

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.

Mfs New Discovery

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs New Discovery are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Mfs New may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Petroleo Brasileiro and Mfs New

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

The idea behind Petroleo Brasileiro Petrobras and Mfs New Discovery 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.