Correlation Between Petroleo Brasileiro and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Veolia Environnement 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 Veolia Environnement 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 Veolia Environnement SA, you can compare the effects of market volatilities on Petroleo Brasileiro and Veolia Environnement 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 Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Veolia Environnement.
Diversification Opportunities for Petroleo Brasileiro and Veolia Environnement
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Petroleo and Veolia is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Veolia Environnement SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement 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 Veolia Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veolia Environnement has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Veolia Environnement go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Veolia Environnement
Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 7.5 times less return on investment than Veolia Environnement. In addition to that, Petroleo Brasileiro is 1.0 times more volatile than Veolia Environnement SA. It trades about 0.02 of its total potential returns per unit of risk. Veolia Environnement SA is currently generating about 0.16 per unit of volatility. If you would invest 2,785 in Veolia Environnement SA on December 3, 2024 and sell it today you would earn a total of 277.00 from holding Veolia Environnement SA or generate 9.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Veolia Environnement SA
Performance |
Timeline |
Petroleo Brasileiro |
Veolia Environnement |
Petroleo Brasileiro and Veolia Environnement Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Petroleo Brasileiro and Veolia Environnement
The main advantage of trading using opposite Petroleo Brasileiro and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Veolia Environnement 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 Veolia Environnement will offset losses from the drop in Veolia Environnement's 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 |
Veolia Environnement vs. Montrose Environmental Grp | Veolia Environnement vs. Clean Harbors | Veolia Environnement vs. Susglobal Energy Corp | Veolia Environnement vs. Republic Services |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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