Correlation Between Petroleo Brasileiro and Pioneer Multi

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

Diversification Opportunities for Petroleo Brasileiro and Pioneer Multi

0.48

Correlation Coefficient

Petroleo Brasileiro  Pioneer Multi

Very weak diversification

The 3 months correlation between Petroleo and Pioneer is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Pioneer Multi Asset Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Multi Asset 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 Pioneer Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Multi Asset has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Pioneer Multi go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Pioneer Multi

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Pioneer Multi. In addition to that, Petroleo Brasileiro is 5.64 times more volatile than Pioneer Multi Asset Income. It trades about -0.09 of its total potential returns per unit of risk. Pioneer Multi Asset Income is currently generating about -0.21 per unit of volatility. If you would invest  1,211  in Pioneer Multi Asset Income on September 24, 2024 and sell it today you would lose (46.00) from holding Pioneer Multi Asset Income or give up 3.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Pioneer Multi Asset Income

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 latest unsteady performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pioneer Multi Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pioneer Multi Asset Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Pioneer Multi 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 Pioneer Multi

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

The idea behind Petroleo Brasileiro Petrobras and Pioneer Multi Asset Income 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.