Correlation Between Petro Rio and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Petro Rio and Ross Stores 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 Petro Rio and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petro Rio SA and Ross Stores, you can compare the effects of market volatilities on Petro Rio and Ross Stores 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 Petro Rio with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petro Rio and Ross Stores.
Diversification Opportunities for Petro Rio and Ross Stores
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petro and Ross is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Petro Rio SA and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Petro Rio 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 Petro Rio SA are associated (or correlated) with Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Petro Rio i.e., Petro Rio and Ross Stores go up and down completely randomly.
Pair Corralation between Petro Rio and Ross Stores
Assuming the 90 days trading horizon Petro Rio SA is expected to under-perform the Ross Stores. But the stock apears to be less risky and, when comparing its historical volatility, Petro Rio SA is 1.35 times less risky than Ross Stores. The stock trades about -0.07 of its potential returns per unit of risk. The Ross Stores is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 41,208 in Ross Stores on September 4, 2024 and sell it today you would earn a total of 5,392 from holding Ross Stores or generate 13.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Petro Rio SA vs. Ross Stores
Performance |
| Timeline |
| Petro Rio SA |
| Ross Stores |
Petro Rio and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petro Rio and Ross Stores
The main advantage of trading using opposite Petro Rio and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petro Rio position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| Petro Rio vs. Telecomunicaes Brasileiras SA | Petro Rio vs. Capital One Financial | Petro Rio vs. Monster Beverage | Petro Rio vs. Ameriprise Financial |
| Ross Stores vs. Fundo Investimento Imobiliario | Ross Stores vs. Fras le SA | Ross Stores vs. Western Digital | Ross Stores vs. Clave Indices De |
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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