Correlation Between Petroleo Brasileiro and Predex Funds

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

Diversification Opportunities for Petroleo Brasileiro and Predex Funds

0.0

Correlation Coefficient

Petroleo Brasileiro  Predex Funds

Pay attention - limited upside

The 3 months correlation between Petroleo and Predex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Predex Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Predex Funds 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 Predex Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Predex Funds has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Predex Funds go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Predex Funds

If you would invest  1,275  in Petroleo Brasileiro Petrobras on December 28, 2024 and sell it today you would earn a total of  164.00  from holding Petroleo Brasileiro Petrobras or generate 12.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	83.33%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Predex Funds

Petroleo Brasileiro

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Petroleo Brasileiro Petrobras are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Petroleo Brasileiro reported solid returns over the last few months and may actually be approaching a breakup point.

Predex Funds

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Petroleo Brasileiro Petrobras and Predex Funds 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.