Correlation Between Petroleo Brasileiro and PARKER

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

Diversification Opportunities for Petroleo Brasileiro and PARKER

0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Petroleo and PARKER is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and PARKER HANNIFIN PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKER HANNIFIN PORATION 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 PARKER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKER HANNIFIN PORATION has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and PARKER go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and PARKER

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.88 times more return on investment than PARKER. However, Petroleo Brasileiro is 1.88 times more volatile than PARKER HANNIFIN PORATION. It trades about 0.18 of its potential returns per unit of risk. PARKER HANNIFIN PORATION is currently generating about -0.07 per unit of risk. If you would invest  1,362  in Petroleo Brasileiro Petrobras on September 12, 2024 and sell it today you would earn a total of  98.00  from holding Petroleo Brasileiro Petrobras or generate 7.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Petroleo Brasileiro Petrobras  vs.  PARKER HANNIFIN PORATION

 Performance 
       Timeline  
Petroleo Brasileiro 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Petroleo Brasileiro Petrobras are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.
PARKER HANNIFIN PORATION 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PARKER HANNIFIN PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PARKER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Petroleo Brasileiro and PARKER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Petroleo Brasileiro and PARKER

The main advantage of trading using opposite Petroleo Brasileiro and PARKER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, PARKER 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 PARKER will offset losses from the drop in PARKER's long position.
The idea behind Petroleo Brasileiro Petrobras and PARKER HANNIFIN PORATION 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.
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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