Correlation Between Petrleo Brasileiro and Shell PLC
Can any of the company-specific risk be diversified away by investing in both Petrleo Brasileiro and Shell PLC 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 Shell PLC 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 Shell PLC ADR, you can compare the effects of market volatilities on Petrleo Brasileiro and Shell PLC 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 Shell PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrleo Brasileiro and Shell PLC.
Diversification Opportunities for Petrleo Brasileiro and Shell PLC
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Petrleo and Shell is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Petrleo Brasileiro SA and Shell PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shell PLC ADR 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 Shell PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shell PLC ADR has no effect on the direction of Petrleo Brasileiro i.e., Petrleo Brasileiro and Shell PLC go up and down completely randomly.
Pair Corralation between Petrleo Brasileiro and Shell PLC
Assuming the 90 days horizon Petrleo Brasileiro is expected to generate 1.45 times less return on investment than Shell PLC. In addition to that, Petrleo Brasileiro is 1.76 times more volatile than Shell PLC ADR. It trades about 0.1 of its total potential returns per unit of risk. Shell PLC ADR is currently generating about 0.27 per unit of volatility. If you would invest 6,669 in Shell PLC ADR on March 27, 2025 and sell it today you would earn a total of 415.00 from holding Shell PLC ADR or generate 6.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrleo Brasileiro SA vs. Shell PLC ADR
Performance |
| Timeline |
| Petrleo Brasileiro |
| Shell PLC ADR |
Petrleo Brasileiro and Shell PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrleo Brasileiro and Shell PLC
The main advantage of trading using opposite Petrleo Brasileiro and Shell PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrleo Brasileiro position performs unexpectedly, Shell PLC 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 Shell PLC will offset losses from the drop in Shell PLC's long position.| Petrleo Brasileiro vs. Petroleo Brasileiro Petrobras | Petrleo Brasileiro vs. Equinor ASA ADR | Petrleo Brasileiro vs. Eni SpA ADR | Petrleo Brasileiro vs. YPF Sociedad Anonima |
| Shell PLC vs. Exxon Mobil Corp | Shell PLC vs. Chevron Corp | Shell PLC vs. TotalEnergies SE ADR | Shell PLC vs. Petroleo Brasileiro Petrobras |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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