Correlation Between Petroleo Brasileiro and Atmus Filtration
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Atmus Filtration 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 Atmus Filtration 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 Atmus Filtration Technologies, you can compare the effects of market volatilities on Petroleo Brasileiro and Atmus Filtration 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 Atmus Filtration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Atmus Filtration.
Diversification Opportunities for Petroleo Brasileiro and Atmus Filtration
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Petroleo and Atmus is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Atmus Filtration Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmus Filtration Tec 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 Atmus Filtration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atmus Filtration Tec has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Atmus Filtration go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Atmus Filtration
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Atmus Filtration. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 1.07 times less risky than Atmus Filtration. The stock trades about -0.05 of its potential returns per unit of risk. The Atmus Filtration Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,748 in Atmus Filtration Technologies on September 28, 2024 and sell it today you would earn a total of 179.00 from holding Atmus Filtration Technologies or generate 4.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Atmus Filtration Technologies
Performance |
Timeline |
Petroleo Brasileiro |
Atmus Filtration Tec |
Petroleo Brasileiro and Atmus Filtration Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Petroleo Brasileiro and Atmus Filtration
The main advantage of trading using opposite Petroleo Brasileiro and Atmus Filtration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Atmus Filtration 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 Atmus Filtration will offset losses from the drop in Atmus Filtration's long position.Petroleo Brasileiro vs. Ecopetrol SA ADR | ||
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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