Correlation Between Petroleo Brasileiro and Voya Midcap

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

Diversification Opportunities for Petroleo Brasileiro and Voya Midcap

-0.21

Correlation Coefficient

Petroleo Brasileiro  Voya Midcap

Very good diversification

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

Pair Corralation between Petroleo Brasileiro and Voya Midcap

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Voya Midcap. In addition to that, Petroleo Brasileiro is 1.42 times more volatile than Voya Midcap Opportunities. It trades about -0.06 of its total potential returns per unit of risk. Voya Midcap Opportunities is currently generating about 0.12 per unit of volatility. If you would invest  545.00  in Voya Midcap Opportunities on September 21, 2024 and sell it today you would earn a total of  49.00  from holding Voya Midcap Opportunities or generate 8.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Voya Midcap Opportunities

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.

Voya Midcap Opportunities

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Midcap Opportunities are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Voya Midcap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Petroleo Brasileiro and Voya Midcap

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

The idea behind Petroleo Brasileiro Petrobras and Voya Midcap Opportunities 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 Global Correlations module to find global opportunities by holding instruments from different markets.