Correlation Between Petroleo Brasileiro and Tilray

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

Diversification Opportunities for Petroleo Brasileiro and Tilray

0.05

Correlation Coefficient

Petroleo Brasileiro  Tilray

Significant diversification

The 3 months correlation between Petroleo and Tilray is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Tilray Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tilray Inc 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 Tilray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tilray Inc has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Tilray go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Tilray

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Tilray. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 2.79 times less risky than Tilray. The stock trades about -0.02 of its potential returns per unit of risk. The Tilray Inc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  186.00  in Tilray Inc on October 8, 2024 and sell it today you would earn a total of  23.00  from holding Tilray Inc or generate 12.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Tilray Inc

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 recent stock price agitation, may contribute to short-term losses for the retail investors.

Tilray Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tilray Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Tilray is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and Tilray

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

The idea behind Petroleo Brasileiro Petrobras and Tilray Inc 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.