Correlation Between Petroleo Brasileiro and Fortuna Silver
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Fortuna Silver 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 Fortuna Silver 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 Fortuna Silver Mines, you can compare the effects of market volatilities on Petroleo Brasileiro and Fortuna Silver 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 Fortuna Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Fortuna Silver.
Diversification Opportunities for Petroleo Brasileiro and Fortuna Silver
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petroleo and Fortuna is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Fortuna Silver Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortuna Silver Mines 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 Fortuna Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortuna Silver Mines has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Fortuna Silver go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Fortuna Silver
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Fortuna Silver. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 2.27 times less risky than Fortuna Silver. The stock trades about -0.03 of its potential returns per unit of risk. The Fortuna Silver Mines is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 676.00 in Fortuna Silver Mines on September 15, 2024 and sell it today you would lose (4.00) from holding Fortuna Silver Mines or give up 0.59% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Fortuna Silver Mines
Performance |
Timeline |
Petroleo Brasileiro |
Fortuna Silver Mines |
Petroleo Brasileiro and Fortuna Silver Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Petroleo Brasileiro and Fortuna Silver
The main advantage of trading using opposite Petroleo Brasileiro and Fortuna Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Fortuna Silver 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 Fortuna Silver will offset losses from the drop in Fortuna Silver's long position.Petroleo Brasileiro vs. Ecopetrol SA ADR | ||
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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