Correlation Between Petroleo Brasileiro and Mainstay Government

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

Diversification Opportunities for Petroleo Brasileiro and Mainstay Government

-0.33

Correlation Coefficient

Petroleo Brasileiro  Mainstay Government

Very good diversification

The 3 months correlation between Petroleo and Mainstay is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Mainstay Government Liquidity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Government 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 Mainstay Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Government has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Mainstay Government go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Mainstay Government

If you would invest  100.00  in Mainstay Government Liquidity on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Mainstay Government Liquidity or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Mainstay Government Liquidity

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.

Mainstay Government

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Government Liquidity are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mainstay Government 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 Mainstay Government

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

The idea behind Petroleo Brasileiro Petrobras and Mainstay Government Liquidity 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.