Correlation Between Petroleo Brasileiro and DTRGR

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and DTRGR 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 DTRGR 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 DTRGR 515 16 JAN 26, you can compare the effects of market volatilities on Petroleo Brasileiro and DTRGR 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 DTRGR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and DTRGR.

Diversification Opportunities for Petroleo Brasileiro and DTRGR

-0.67

Correlation Coefficient

Petroleo Brasileiro  DTRGR

Excellent diversification

The 3 months correlation between Petroleo and DTRGR is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and DTRGR 515 16 JAN 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTRGR 515 16 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 DTRGR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DTRGR 515 16 has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and DTRGR go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and DTRGR

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the DTRGR. In addition to that, Petroleo Brasileiro is 18.95 times more volatile than DTRGR 515 16 JAN 26. It trades about -0.06 of its total potential returns per unit of risk. DTRGR 515 16 JAN 26 is currently generating about -0.23 per unit of volatility. If you would invest  10,108  in DTRGR 515 16 JAN 26 on September 23, 2024 and sell it today you would lose (66.00) from holding DTRGR 515 16 JAN 26 or give up 0.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	50.77%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  DTRGR 515 16 JAN 26

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 relatively invariable fundamental drivers, Petroleo Brasileiro is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

DTRGR 515 16

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DTRGR 515 16 JAN 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DTRGR is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and DTRGR

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

The idea behind Petroleo Brasileiro Petrobras and DTRGR 515 16 JAN 26 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.