Correlation Between Petroleo Brasileiro and Ibervalles SOCIMI

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

Diversification Opportunities for Petroleo Brasileiro and Ibervalles SOCIMI

-0.51

Correlation Coefficient

Petroleo Brasileiro  Ibervalles SOCIMI

Excellent diversification

The 3 months correlation between Petroleo and Ibervalles is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Ibervalles SOCIMI SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ibervalles SOCIMI 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 Ibervalles SOCIMI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ibervalles SOCIMI has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Ibervalles SOCIMI go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Ibervalles SOCIMI

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.2 times more return on investment than Ibervalles SOCIMI. However, Petroleo Brasileiro is 1.2 times more volatile than Ibervalles SOCIMI SA. It trades about 0.07 of its potential returns per unit of risk. Ibervalles SOCIMI SA is currently generating about 0.03 per unit of risk. If you would invest  738.00  in Petroleo Brasileiro Petrobras on October 7, 2024 and sell it today you would earn a total of  564.00  from holding Petroleo Brasileiro Petrobras or generate 76.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.69%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Ibervalles SOCIMI SA

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.

Ibervalles SOCIMI

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ibervalles SOCIMI SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Ibervalles SOCIMI may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Petroleo Brasileiro and Ibervalles SOCIMI

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

The idea behind Petroleo Brasileiro Petrobras and Ibervalles SOCIMI SA 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.