Correlation Between British American and BTG Pactual
Can any of the company-specific risk be diversified away by investing in both British American and BTG Pactual 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 British American and BTG Pactual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and BTG Pactual Logstica, you can compare the effects of market volatilities on British American and BTG Pactual 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 British American with a short position of BTG Pactual. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and BTG Pactual.
Diversification Opportunities for British American and BTG Pactual
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between British and BTG is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and BTG Pactual Logstica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTG Pactual Logstica and British American 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 British American Tobacco are associated (or correlated) with BTG Pactual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTG Pactual Logstica has no effect on the direction of British American i.e., British American and BTG Pactual go up and down completely randomly.
Pair Corralation between British American and BTG Pactual
Assuming the 90 days trading horizon British American Tobacco is expected to generate 1.35 times more return on investment than BTG Pactual. However, British American is 1.35 times more volatile than BTG Pactual Logstica. It trades about 0.45 of its potential returns per unit of risk. BTG Pactual Logstica is currently generating about 0.07 per unit of risk. If you would invest 3,988 in British American Tobacco on August 27, 2024 and sell it today you would earn a total of 364.00 from holding British American Tobacco or generate 9.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. BTG Pactual Logstica
Performance |
| Timeline |
| British American Tobacco |
| BTG Pactual Logstica |
British American and BTG Pactual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and BTG Pactual
The main advantage of trading using opposite British American and BTG Pactual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, BTG Pactual 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 BTG Pactual will offset losses from the drop in BTG Pactual's long position.| British American vs. Fras le SA | British American vs. Clave Indices De | British American vs. BTG Pactual Logstica | British American vs. Telefonaktiebolaget LM Ericsson |
| BTG Pactual vs. Fundo Investimento Imobiliario | BTG Pactual vs. KILIMA VOLKANO RECEBVEIS | BTG Pactual vs. Santander Renda De | BTG Pactual vs. DEVANT PROPERTIES FUNDO |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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