Correlation Between Petroleo Brasileiro and College Retirement

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

Diversification Opportunities for Petroleo Brasileiro and College Retirement

-0.33

Correlation Coefficient

Petroleo Brasileiro  College Retirement

Very good diversification

The 3 months correlation between Petroleo and College is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and College Retirement Equities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on College Retirement 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 College Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of College Retirement has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and College Retirement go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and College Retirement

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 3.4 times more return on investment than College Retirement. However, Petroleo Brasileiro is 3.4 times more volatile than College Retirement Equities. It trades about 0.14 of its potential returns per unit of risk. College Retirement Equities is currently generating about 0.06 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  71.00  from holding Petroleo Brasileiro Petrobras or generate 5.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  College Retirement Equities

Petroleo Brasileiro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petroleo Brasileiro Petrobras has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

College Retirement

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in College Retirement Equities are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, College Retirement may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Petroleo Brasileiro and College Retirement

The main advantage of trading using opposite Petroleo Brasileiro and College Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, College Retirement 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 College Retirement will offset losses from the drop in College Retirement's long position.

The idea behind Petroleo Brasileiro Petrobras and College Retirement Equities 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.