Correlation Between Petroleo Brasileiro and Waycross Focused

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

Diversification Opportunities for Petroleo Brasileiro and Waycross Focused

-0.34

Correlation Coefficient

Petroleo Brasileiro  Waycross Focused

Very good diversification

The 3 months correlation between Petroleo and Waycross is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Waycross Focused Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waycross Focused Core 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 Waycross Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waycross Focused Core has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Waycross Focused go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Waycross Focused

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Waycross Focused. In addition to that, Petroleo Brasileiro is 1.95 times more volatile than Waycross Focused Core. It trades about -0.04 of its total potential returns per unit of risk. Waycross Focused Core is currently generating about 0.1 per unit of volatility. If you would invest  1,480  in Waycross Focused Core on September 24, 2024 and sell it today you would earn a total of  225.00  from holding Waycross Focused Core or generate 15.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Waycross Focused Core

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 unsteady 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.

Waycross Focused Core

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waycross Focused Core are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Waycross Focused 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 Waycross Focused

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

The idea behind Petroleo Brasileiro Petrobras and Waycross Focused Core 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.