Correlation Between Petroleo Brasileiro and RENTOKIL INITIAL
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and RENTOKIL INITIAL 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 RENTOKIL INITIAL 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 RENTOKIL INITIAL ADR5, you can compare the effects of market volatilities on Petroleo Brasileiro and RENTOKIL INITIAL 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 RENTOKIL INITIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and RENTOKIL INITIAL.
Diversification Opportunities for Petroleo Brasileiro and RENTOKIL INITIAL
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petroleo and RENTOKIL is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and RENTOKIL INITIAL ADR5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RENTOKIL INITIAL ADR5 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 RENTOKIL INITIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RENTOKIL INITIAL ADR5 has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and RENTOKIL INITIAL go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and RENTOKIL INITIAL
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the RENTOKIL INITIAL. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 1.0 times less risky than RENTOKIL INITIAL. The stock trades about -0.24 of its potential returns per unit of risk. The RENTOKIL INITIAL ADR5 is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2,420 in RENTOKIL INITIAL ADR5 on September 23, 2024 and sell it today you would lose (40.00) from holding RENTOKIL INITIAL ADR5 or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. RENTOKIL INITIAL ADR5
Performance |
| Timeline |
| Petroleo Brasileiro |
| RENTOKIL INITIAL ADR5 |
Petroleo Brasileiro and RENTOKIL INITIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and RENTOKIL INITIAL
The main advantage of trading using opposite Petroleo Brasileiro and RENTOKIL INITIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, RENTOKIL INITIAL 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 RENTOKIL INITIAL will offset losses from the drop in RENTOKIL INITIAL's long position.| Petroleo Brasileiro vs. Shell PLC ADR | Petroleo Brasileiro vs. Suncor Energy | Petroleo Brasileiro vs. TotalEnergies SE ADR | Petroleo Brasileiro vs. Equinor ASA ADR |
| RENTOKIL INITIAL vs. Cintas | RENTOKIL INITIAL vs. INPOST SA EO | RENTOKIL INITIAL vs. Elis SA | RENTOKIL INITIAL vs. PARK24 LTD |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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