Correlation Between Petroleo Brasileiro and Vanguard Russell

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Vanguard Russell 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 Vanguard Russell 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 Vanguard Russell 2000, you can compare the effects of market volatilities on Petroleo Brasileiro and Vanguard Russell 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 Vanguard Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Vanguard Russell.

Diversification Opportunities for Petroleo Brasileiro and Vanguard Russell

-0.17

Correlation Coefficient

Petroleo Brasileiro  Vanguard Russell

Good diversification

The 3 months correlation between Petroleo and Vanguard is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Vanguard Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Russell 2000 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 Vanguard Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Russell 2000 has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Vanguard Russell go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Vanguard Russell

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.6 times more return on investment than Vanguard Russell. However, Petroleo Brasileiro is 1.6 times more volatile than Vanguard Russell 2000. It trades about 0.08 of its potential returns per unit of risk. Vanguard Russell 2000 is currently generating about 0.05 per unit of risk. If you would invest  642.00  in Petroleo Brasileiro Petrobras on September 21, 2024 and sell it today you would earn a total of  653.00  from holding Petroleo Brasileiro Petrobras or generate 101.71% 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.  Vanguard Russell 2000

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.

Vanguard Russell 2000

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Russell 2000 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Vanguard Russell 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 Vanguard Russell

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

The idea behind Petroleo Brasileiro Petrobras and Vanguard Russell 2000 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 CEOs Directory module to screen CEOs from public companies around the world.