Correlation Between Petroleo Brasileiro and Grayscale Filecoin

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

Diversification Opportunities for Petroleo Brasileiro and Grayscale Filecoin

0.21

Correlation Coefficient

Petroleo Brasileiro  Grayscale Filecoin

Modest diversification

The 3 months correlation between Petroleo and Grayscale is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Grayscale Filecoin Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Filecoin Trust 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 Grayscale Filecoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Filecoin Trust has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Grayscale Filecoin go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Grayscale Filecoin

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Grayscale Filecoin. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 9.0 times less risky than Grayscale Filecoin. The stock trades about -0.05 of its potential returns per unit of risk. The Grayscale Filecoin Trust is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5,200  in Grayscale Filecoin Trust on September 20, 2024 and sell it today you would earn a total of  2,300  from holding Grayscale Filecoin Trust or generate 44.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Grayscale Filecoin Trust

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.

Grayscale Filecoin Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Filecoin Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Grayscale Filecoin reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petroleo Brasileiro and Grayscale Filecoin

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

The idea behind Petroleo Brasileiro Petrobras and Grayscale Filecoin Trust 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.