Correlation Between Shell PLC and Petroleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both Shell PLC and Petroleo Brasileiro 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 Shell PLC and Petroleo Brasileiro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shell PLC ADR and Petroleo Brasileiro Petrobras, you can compare the effects of market volatilities on Shell PLC and Petroleo Brasileiro 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 Shell PLC with a short position of Petroleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shell PLC and Petroleo Brasileiro.
Diversification Opportunities for Shell PLC and Petroleo Brasileiro
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shell and Petroleo is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Shell PLC ADR and Petroleo Brasileiro Petrobras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petroleo Brasileiro and Shell PLC 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 Shell PLC ADR are associated (or correlated) with Petroleo Brasileiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petroleo Brasileiro has no effect on the direction of Shell PLC i.e., Shell PLC and Petroleo Brasileiro go up and down completely randomly.
Pair Corralation between Shell PLC and Petroleo Brasileiro
Given the investment horizon of 90 days Shell PLC is expected to generate 2.65 times less return on investment than Petroleo Brasileiro. But when comparing it to its historical volatility, Shell PLC ADR is 1.65 times less risky than Petroleo Brasileiro. It trades about 0.07 of its potential returns per unit of risk. Petroleo Brasileiro Petrobras is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 794.00 in Petroleo Brasileiro Petrobras on January 31, 2024 and sell it today you would earn a total of 939.00 from holding Petroleo Brasileiro Petrobras or generate 118.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Shell PLC ADR vs. Petroleo Brasileiro Petrobras
Performance |
Timeline |
Shell PLC ADR |
Petroleo Brasileiro |
Shell PLC and Petroleo Brasileiro Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shell PLC and Petroleo Brasileiro
The main advantage of trading using opposite Shell PLC and Petroleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shell PLC position performs unexpectedly, Petroleo Brasileiro 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 Petroleo Brasileiro will offset losses from the drop in Petroleo Brasileiro's long position.Shell PLC vs. Petroleo Brasileiro Petrobras | Shell PLC vs. Equinor ASA ADR | Shell PLC vs. Eni SpA ADR | Shell PLC vs. YPF Sociedad Anonima |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
CEOs Directory Screen CEOs from public companies around the world | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |