Correlation Between Petroleo Brasileiro and EXPEDIA

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and EXPEDIA 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 EXPEDIA 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 EXPEDIA GROUP INC, you can compare the effects of market volatilities on Petroleo Brasileiro and EXPEDIA 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 EXPEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and EXPEDIA.

Diversification Opportunities for Petroleo Brasileiro and EXPEDIA

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Petroleo and EXPEDIA is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and EXPEDIA GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXPEDIA GROUP INC 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 EXPEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXPEDIA GROUP INC has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and EXPEDIA go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and EXPEDIA

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 3.26 times more return on investment than EXPEDIA. However, Petroleo Brasileiro is 3.26 times more volatile than EXPEDIA GROUP INC. It trades about -0.03 of its potential returns per unit of risk. EXPEDIA GROUP INC is currently generating about -0.15 per unit of risk. If you would invest  1,423  in Petroleo Brasileiro Petrobras on September 15, 2024 and sell it today you would lose (50.00) from holding Petroleo Brasileiro Petrobras or give up 3.51% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy96.88%
ValuesDaily Returns

Petroleo Brasileiro Petrobras  vs.  EXPEDIA GROUP INC

 Performance 
       Timeline  
Petroleo Brasileiro 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
EXPEDIA GROUP INC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days EXPEDIA GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EXPEDIA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Petroleo Brasileiro and EXPEDIA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Petroleo Brasileiro and EXPEDIA

The main advantage of trading using opposite Petroleo Brasileiro and EXPEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, EXPEDIA 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 EXPEDIA will offset losses from the drop in EXPEDIA's long position.
The idea behind Petroleo Brasileiro Petrobras and EXPEDIA GROUP INC 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.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

Other Complementary Tools

USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
Economic Indicators
Top statistical indicators that provide insights into how an economy is performing
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Stocks Directory
Find actively traded stocks across global markets
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like