Correlation Between Petrleo Brasileiro and Best Buy
Can any of the company-specific risk be diversified away by investing in both Petrleo Brasileiro and Best Buy 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 Petrleo Brasileiro and Best Buy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrleo Brasileiro SA and Best Buy Co, you can compare the effects of market volatilities on Petrleo Brasileiro and Best Buy 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 Petrleo Brasileiro with a short position of Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrleo Brasileiro and Best Buy.
Diversification Opportunities for Petrleo Brasileiro and Best Buy
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petrleo and Best is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Petrleo Brasileiro SA and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy and Petrleo 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 Petrleo Brasileiro SA are associated (or correlated) with Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of Petrleo Brasileiro i.e., Petrleo Brasileiro and Best Buy go up and down completely randomly.
Pair Corralation between Petrleo Brasileiro and Best Buy
Assuming the 90 days trading horizon Petrleo Brasileiro SA is expected to generate 0.76 times more return on investment than Best Buy. However, Petrleo Brasileiro SA is 1.31 times less risky than Best Buy. It trades about 0.5 of its potential returns per unit of risk. Best Buy Co is currently generating about -0.25 per unit of risk. If you would invest 3,660 in Petrleo Brasileiro SA on January 25, 2024 and sell it today you would earn a total of 482.00 from holding Petrleo Brasileiro SA or generate 13.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrleo Brasileiro SA vs. Best Buy Co
Performance |
| Timeline |
| Petrleo Brasileiro |
| Best Buy |
Petrleo Brasileiro and Best Buy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrleo Brasileiro and Best Buy
The main advantage of trading using opposite Petrleo Brasileiro and Best Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrleo Brasileiro position performs unexpectedly, Best Buy 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 Best Buy will offset losses from the drop in Best Buy's long position.| Petrleo Brasileiro vs. Vale SA | Petrleo Brasileiro vs. Banco do Brasil | Petrleo Brasileiro vs. Banco Bradesco SA | Petrleo Brasileiro vs. Ita Unibanco Holding |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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