Correlation Between Petroleo Brasileiro and Devon Energy
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Devon Energy 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 Devon Energy 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 Devon Energy, you can compare the effects of market volatilities on Petroleo Brasileiro and Devon Energy 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 Devon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Devon Energy.
Diversification Opportunities for Petroleo Brasileiro and Devon Energy
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Petroleo and Devon is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Devon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Devon Energy 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 Devon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Devon Energy has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Devon Energy go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Devon Energy
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.84 times more return on investment than Devon Energy. However, Petroleo Brasileiro Petrobras is 1.19 times less risky than Devon Energy. It trades about -0.05 of its potential returns per unit of risk. Devon Energy is currently generating about -0.16 per unit of risk. If you would invest 1,387 in Petroleo Brasileiro Petrobras on September 28, 2024 and sell it today you would lose (78.00) from holding Petroleo Brasileiro Petrobras or give up 5.62% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 96.77% |
Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Devon Energy
Performance |
Timeline |
Petroleo Brasileiro |
Devon Energy |
Petroleo Brasileiro and Devon Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Petroleo Brasileiro and Devon Energy
The main advantage of trading using opposite Petroleo Brasileiro and Devon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Devon Energy 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 Devon Energy will offset losses from the drop in Devon Energy'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 |
Devon Energy vs. Monster Beverage Corp | Devon Energy vs. Southern Copper | Devon Energy vs. Verizon Communications | Devon Energy vs. Grupo Carso SAB |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |