Correlation Between Petroleo Brasileiro and Cenovus Energy
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Cenovus Energy 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 Cenovus Energy 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 Cenovus Energy, you can compare the effects of market volatilities on Petroleo Brasileiro and Cenovus Energy 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 Cenovus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Cenovus Energy.
Diversification Opportunities for Petroleo Brasileiro and Cenovus Energy
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petroleo and Cenovus is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Cenovus Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenovus Energy 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 Cenovus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cenovus Energy has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Cenovus Energy go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Cenovus Energy
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.4 times more return on investment than Cenovus Energy. However, Petroleo Brasileiro is 1.4 times more volatile than Cenovus Energy. It trades about 0.32 of its potential returns per unit of risk. Cenovus Energy is currently generating about 0.24 per unit of risk. If you would invest 1,494 in Petroleo Brasileiro Petrobras on January 25, 2024 and sell it today you would earn a total of 187.00 from holding Petroleo Brasileiro Petrobras or generate 12.52% 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. Cenovus Energy
Performance |
| Timeline |
| Petroleo Brasileiro |
| Cenovus Energy |
Petroleo Brasileiro and Cenovus Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Cenovus Energy
The main advantage of trading using opposite Petroleo Brasileiro and Cenovus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Cenovus Energy 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 Cenovus Energy will offset losses from the drop in Cenovus Energy's long position.| Petroleo Brasileiro vs. Ecopetrol SA ADR | Petroleo Brasileiro vs. Equinor ASA ADR | Petroleo Brasileiro vs. Eni SpA ADR | Petroleo Brasileiro vs. Cenovus Energy |
| Cenovus Energy vs. Imperial Oil | Cenovus Energy vs. Exxon Mobil Corp | Cenovus Energy vs. Chevron Corp | Cenovus Energy vs. BP PLC ADR |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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