Correlation Between Petroleo Brasileiro and Smead Funds
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Smead 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 Smead 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 Smead Funds Trust, you can compare the effects of market volatilities on Petroleo Brasileiro and Smead 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 Smead Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Smead Funds.
Diversification Opportunities for Petroleo Brasileiro and Smead Funds
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Petroleo and Smead is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Smead Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smead Funds Trust 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 Smead Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smead Funds Trust has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Smead Funds go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Smead Funds
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Smead Funds. In addition to that, Petroleo Brasileiro is 1.74 times more volatile than Smead Funds Trust. It trades about -0.01 of its total potential returns per unit of risk. Smead Funds Trust is currently generating about 0.01 per unit of volatility. If you would invest 5,580 in Smead Funds Trust on December 4, 2024 and sell it today you would earn a total of 18.00 from holding Smead Funds Trust or generate 0.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Smead Funds Trust
Performance |
Timeline |
Petroleo Brasileiro |
Smead Funds Trust |
Petroleo Brasileiro and Smead Funds Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Petroleo Brasileiro and Smead Funds
The main advantage of trading using opposite Petroleo Brasileiro and Smead Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Smead 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 Smead Funds will offset losses from the drop in Smead Funds' long position.Petroleo Brasileiro vs. Ecopetrol SA ADR | Petroleo Brasileiro vs. Equinor ASA ADR | Petroleo Brasileiro vs. Eni SpA ADR | Petroleo Brasileiro vs. Cenovus Energy |
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Check out your portfolio center.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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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