Correlation Between Petroleo Brasileiro and Virtus Investment

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

Diversification Opportunities for Petroleo Brasileiro and Virtus Investment

-0.35

Correlation Coefficient

Petroleo Brasileiro  Virtus Investment

Very good diversification

The 3 months correlation between Petroleo and Virtus is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Virtus Investment Partners, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Virtus Investment go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Virtus Investment

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.02 times more return on investment than Virtus Investment. However, Petroleo Brasileiro is 1.02 times more volatile than Virtus Investment Partners,. It trades about 0.07 of its potential returns per unit of risk. Virtus Investment Partners, is currently generating about 0.04 per unit of risk. If you would invest  733.00  in Petroleo Brasileiro Petrobras on September 17, 2024 and sell it today you would earn a total of  628.00  from holding Petroleo Brasileiro Petrobras or generate 85.68% 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.  Virtus Investment Partners,

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.

Virtus Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Virtus Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petroleo Brasileiro and Virtus Investment

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

The idea behind Petroleo Brasileiro Petrobras and Virtus Investment Partners, 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.