Correlation Between Petroleo Brasileiro and Endeavour Silver

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

Diversification Opportunities for Petroleo Brasileiro and Endeavour Silver

-0.41

Correlation Coefficient

Petroleo Brasileiro  Endeavour Silver

Very good diversification

The 3 months correlation between Petroleo and Endeavour is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Endeavour Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Silver Corp 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 Endeavour Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Silver Corp has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Endeavour Silver go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Endeavour Silver

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Endeavour Silver. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 2.38 times less risky than Endeavour Silver. The stock trades about -0.06 of its potential returns per unit of risk. The Endeavour Silver Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  363.00  in Endeavour Silver Corp on September 22, 2024 and sell it today you would earn a total of  8.00  from holding Endeavour Silver Corp or generate 2.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Endeavour Silver Corp

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.

Endeavour Silver Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Silver Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Endeavour Silver may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Petroleo Brasileiro and Endeavour Silver

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

The idea behind Petroleo Brasileiro Petrobras and Endeavour Silver Corp 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.