Correlation Between Petroleo Brasileiro and Daimler Truck
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Daimler Truck 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 Daimler Truck 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 Daimler Truck Holding, you can compare the effects of market volatilities on Petroleo Brasileiro and Daimler Truck 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 Daimler Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Daimler Truck.
Diversification Opportunities for Petroleo Brasileiro and Daimler Truck
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Petroleo and Daimler is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Daimler Truck Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daimler Truck Holding 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 Daimler Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daimler Truck Holding has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Daimler Truck go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Daimler Truck
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Daimler Truck. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 1.01 times less risky than Daimler Truck. The stock trades about -0.04 of its potential returns per unit of risk. The Daimler Truck Holding is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 4,214 in Daimler Truck Holding on September 24, 2024 and sell it today you would lose (509.00) from holding Daimler Truck Holding or give up 12.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.65% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Daimler Truck Holding
Performance |
| Timeline |
| Petroleo Brasileiro |
| Daimler Truck Holding |
Petroleo Brasileiro and Daimler Truck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Daimler Truck
The main advantage of trading using opposite Petroleo Brasileiro and Daimler Truck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Daimler Truck 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 Daimler Truck will offset losses from the drop in Daimler Truck'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 |
| Daimler Truck vs. Gold Road Resources | Daimler Truck vs. GOLD ROAD RES | Daimler Truck vs. Fevertree Drinks PLC | Daimler Truck vs. Yuexiu Transport Infrastructure |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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