Correlation Between Petroleo Brasileiro and DAWSON GEOPHYSICAL
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and DAWSON GEOPHYSICAL 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 DAWSON GEOPHYSICAL 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 DAWSON GEOPHYSICAL, you can compare the effects of market volatilities on Petroleo Brasileiro and DAWSON GEOPHYSICAL 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 DAWSON GEOPHYSICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and DAWSON GEOPHYSICAL.
Diversification Opportunities for Petroleo Brasileiro and DAWSON GEOPHYSICAL
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petroleo and DAWSON is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and DAWSON GEOPHYSICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAWSON GEOPHYSICAL 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 DAWSON GEOPHYSICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAWSON GEOPHYSICAL has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and DAWSON GEOPHYSICAL go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and DAWSON GEOPHYSICAL
Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 1.48 times less return on investment than DAWSON GEOPHYSICAL. In addition to that, Petroleo Brasileiro is 1.14 times more volatile than DAWSON GEOPHYSICAL. It trades about 0.1 of its total potential returns per unit of risk. DAWSON GEOPHYSICAL is currently generating about 0.17 per unit of volatility. If you would invest 1,860 in DAWSON GEOPHYSICAL on September 13, 2024 and sell it today you would earn a total of 120.00 from holding DAWSON GEOPHYSICAL or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. DAWSON GEOPHYSICAL
Performance |
| Timeline |
| Petroleo Brasileiro |
| DAWSON GEOPHYSICAL |
Petroleo Brasileiro and DAWSON GEOPHYSICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and DAWSON GEOPHYSICAL
The main advantage of trading using opposite Petroleo Brasileiro and DAWSON GEOPHYSICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, DAWSON GEOPHYSICAL 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 DAWSON GEOPHYSICAL will offset losses from the drop in DAWSON GEOPHYSICAL's long position.| Petroleo Brasileiro vs. Ecopetrol SA ADR | Petroleo Brasileiro vs. Equinor ASA ADR | Petroleo Brasileiro vs. Eni SpA ADR | Petroleo Brasileiro vs. Cenovus Energy |
| DAWSON GEOPHYSICAL vs. BJs Wholesale Club | DAWSON GEOPHYSICAL vs. Singapore Telecommunications Limited | DAWSON GEOPHYSICAL vs. Mobilezone Holding AG | DAWSON GEOPHYSICAL vs. Burlington Stores |
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 Stocks Directory module to find actively traded stocks across global markets.
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