Correlation Between Petroleo Brasileiro and IncomeShares Coinbase

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

Diversification Opportunities for Petroleo Brasileiro and IncomeShares Coinbase

0.08

Correlation Coefficient

Petroleo Brasileiro  IncomeShares Coinbase

Significant diversification

The 3 months correlation between Petroleo and IncomeShares is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and IncomeShares Coinbase Options in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IncomeShares Coinbase 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 IncomeShares Coinbase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IncomeShares Coinbase has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and IncomeShares Coinbase go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and IncomeShares Coinbase

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.62 times more return on investment than IncomeShares Coinbase. However, Petroleo Brasileiro Petrobras is 1.61 times less risky than IncomeShares Coinbase. It trades about -0.05 of its potential returns per unit of risk. IncomeShares Coinbase Options is currently generating about -0.15 per unit of risk. If you would invest  1,338  in Petroleo Brasileiro Petrobras on September 29, 2024 and sell it today you would lose (75.00) from holding Petroleo Brasileiro Petrobras or give up 5.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	44.44%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  IncomeShares Coinbase Options

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 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.

IncomeShares Coinbase

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IncomeShares Coinbase Options has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with Petroleo Brasileiro and IncomeShares Coinbase

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

The idea behind Petroleo Brasileiro Petrobras and IncomeShares Coinbase Options 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.