Correlation Between Petroleo Brasileiro and Tiaa Cref

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Tiaa Cref 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 Tiaa Cref 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 Tiaa Cref Lifecycle 2055, you can compare the effects of market volatilities on Petroleo Brasileiro and Tiaa Cref 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 Tiaa Cref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Tiaa Cref.

Diversification Opportunities for Petroleo Brasileiro and Tiaa Cref

0.24

Correlation Coefficient

Petroleo Brasileiro  Tiaa Cref

Modest diversification

The 3 months correlation between Petroleo and Tiaa is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Tiaa Cref Lifecycle 2055 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Lifecycle 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 Tiaa Cref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiaa Cref Lifecycle has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Tiaa Cref go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Tiaa Cref

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Tiaa Cref. In addition to that, Petroleo Brasileiro is 2.22 times more volatile than Tiaa Cref Lifecycle 2055. It trades about -0.06 of its total potential returns per unit of risk. Tiaa Cref Lifecycle 2055 is currently generating about -0.07 per unit of volatility. If you would invest  1,794  in Tiaa Cref Lifecycle 2055 on September 23, 2024 and sell it today you would lose (64.00) from holding Tiaa Cref Lifecycle 2055 or give up 3.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Tiaa Cref Lifecycle 2055

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.

Tiaa Cref Lifecycle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tiaa Cref Lifecycle 2055 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Tiaa Cref is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and Tiaa Cref

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

The idea behind Petroleo Brasileiro Petrobras and Tiaa Cref Lifecycle 2055 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 CEOs Directory module to screen CEOs from public companies around the world.