Correlation Between Petroleo Brasileiro and Destinations Core

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

Diversification Opportunities for Petroleo Brasileiro and Destinations Core

0.65

Correlation Coefficient

Petroleo Brasileiro  Destinations Core

Poor diversification

The 3 months correlation between Petroleo and Destinations is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Destinations Core Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Destinations Core Fixed 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 Destinations Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Destinations Core Fixed has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Destinations Core go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Destinations Core

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Destinations Core. In addition to that, Petroleo Brasileiro is 5.23 times more volatile than Destinations Core Fixed. It trades about 0.0 of its total potential returns per unit of risk. Destinations Core Fixed is currently generating about 0.04 per unit of volatility. If you would invest  846.00  in Destinations Core Fixed on September 24, 2024 and sell it today you would earn a total of  13.00  from holding Destinations Core Fixed or generate 1.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.21%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Destinations Core Fixed

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 latest unsteady performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Destinations Core Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Destinations Core Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Destinations Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and Destinations Core

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

The idea behind Petroleo Brasileiro Petrobras and Destinations Core Fixed 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.

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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.