Correlation Between Petroleo Brasileiro and George Putnam

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

Diversification Opportunities for Petroleo Brasileiro and George Putnam

-0.13

Correlation Coefficient

Petroleo Brasileiro  George Putnam

Good diversification

The 3 months correlation between Petroleo and George is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and George Putnam Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on George Putnam 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 George Putnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of George Putnam has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and George Putnam go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and George Putnam

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 3.82 times more return on investment than George Putnam. However, Petroleo Brasileiro is 3.82 times more volatile than George Putnam Fund. It trades about 0.07 of its potential returns per unit of risk. George Putnam Fund is currently generating about 0.13 per unit of risk. If you would invest  779.00  in Petroleo Brasileiro Petrobras on September 13, 2024 and sell it today you would earn a total of  647.00  from holding Petroleo Brasileiro Petrobras or generate 83.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  George Putnam Fund

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 recent stock price agitation, may contribute to short-term losses for the retail investors.

George Putnam

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in George Putnam Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, George Putnam 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 George Putnam

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

The idea behind Petroleo Brasileiro Petrobras and George Putnam Fund 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.