Correlation Between Petroleo Brasileiro and Harel Index

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

Diversification Opportunities for Petroleo Brasileiro and Harel Index

-0.41

Correlation Coefficient

Petroleo Brasileiro  Harel Index

Very good diversification

The 3 months correlation between Petroleo and Harel is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Harel Index Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harel Index Funds 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 Harel Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harel Index Funds has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Harel Index go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Harel Index

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Harel Index. In addition to that, Petroleo Brasileiro is 1.97 times more volatile than Harel Index Funds. It trades about -0.03 of its total potential returns per unit of risk. Harel Index Funds is currently generating about 0.12 per unit of volatility. If you would invest  718,900  in Harel Index Funds on September 15, 2024 and sell it today you would earn a total of  32,100  from holding Harel Index Funds or generate 4.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	73.44%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Harel Index Funds

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.

Harel Index Funds

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harel Index Funds are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Harel Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and Harel Index

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

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