Correlation Between Petroleo Brasileiro and Destinations Low

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

Diversification Opportunities for Petroleo Brasileiro and Destinations Low

0.12

Correlation Coefficient

Petroleo Brasileiro  Destinations Low

Average diversification

The 3 months correlation between Petroleo and Destinations is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Destinations Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Destinations Low Duration 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 Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Destinations Low Duration has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Destinations Low go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Destinations Low

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 17.72 times more return on investment than Destinations Low. However, Petroleo Brasileiro is 17.72 times more volatile than Destinations Low Duration. It trades about 0.13 of its potential returns per unit of risk. Destinations Low Duration is currently generating about 0.09 per unit of risk. If you would invest  1,275  in Petroleo Brasileiro Petrobras on December 29, 2024 and sell it today you would earn a total of  164.00  from holding Petroleo Brasileiro Petrobras or generate 12.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Destinations Low Duration

Petroleo Brasileiro

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Petroleo Brasileiro Petrobras are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, Petroleo Brasileiro reported solid returns over the last few months and may actually be approaching a breakup point.

Destinations Low Duration

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Destinations Low Duration are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Destinations Low 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 Low

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

The idea behind Petroleo Brasileiro Petrobras and Destinations Low Duration 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.