Correlation Between Petroleo Brasileiro and VETIVA S

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

Diversification Opportunities for Petroleo Brasileiro and VETIVA S

-0.13

Correlation Coefficient

Petroleo Brasileiro  VETIVA S

Good diversification

The 3 months correlation between Petroleo and VETIVA is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and VETIVA S P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VETIVA S P 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 VETIVA S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VETIVA S P has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and VETIVA S go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and VETIVA S

Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 68.34 times less return on investment than VETIVA S. But when comparing it to its historical volatility, Petroleo Brasileiro Petrobras is 15.07 times less risky than VETIVA S. It trades about 0.04 of its potential returns per unit of risk. VETIVA S P is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  21,000  in VETIVA S P on October 7, 2024 and sell it today you would earn a total of  8,000  from holding VETIVA S P or generate 38.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  VETIVA S P

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 unfluctuating 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.

VETIVA S P

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VETIVA S P are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, VETIVA S exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petroleo Brasileiro and VETIVA S

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

The idea behind Petroleo Brasileiro Petrobras and VETIVA S P 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.