Correlation Between Petroleo Brasileiro and Fundo Investec

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

Diversification Opportunities for Petroleo Brasileiro and Fundo Investec

0.19

Correlation Coefficient

Petroleo Brasileiro  Fundo Investec

Average diversification

The 3 months correlation between Petroleo and Fundo is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Fundo Investec IMB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundo Investec IMB 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 Fundo Investec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundo Investec IMB has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Fundo Investec go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Fundo Investec

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Fundo Investec. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 2.14 times less risky than Fundo Investec. The stock trades about -0.09 of its potential returns per unit of risk. The Fundo Investec IMB is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  5,654  in Fundo Investec IMB on September 24, 2024 and sell it today you would lose (654.00) from holding Fundo Investec IMB or give up 11.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Fundo Investec IMB

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 conflicting 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.

Fundo Investec IMB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundo Investec IMB has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Petroleo Brasileiro and Fundo Investec

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

The idea behind Petroleo Brasileiro Petrobras and Fundo Investec IMB 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.