Correlation Between IShares Trust and Banco BTG
Can any of the company-specific risk be diversified away by investing in both IShares Trust and Banco BTG 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 IShares Trust and Banco BTG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Banco BTG Pactual, you can compare the effects of market volatilities on IShares Trust and Banco BTG 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 IShares Trust with a short position of Banco BTG. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Banco BTG.
Diversification Opportunities for IShares Trust and Banco BTG
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Banco is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Banco BTG Pactual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco BTG Pactual and IShares Trust 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 iShares Trust are associated (or correlated) with Banco BTG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco BTG Pactual has no effect on the direction of IShares Trust i.e., IShares Trust and Banco BTG go up and down completely randomly.
Pair Corralation between IShares Trust and Banco BTG
Assuming the 90 days trading horizon iShares Trust is expected to generate 0.6 times more return on investment than Banco BTG. However, iShares Trust is 1.67 times less risky than Banco BTG. It trades about 0.55 of its potential returns per unit of risk. Banco BTG Pactual is currently generating about -0.15 per unit of risk. If you would invest 8,944 in iShares Trust on September 1, 2024 and sell it today you would earn a total of 1,406 from holding iShares Trust or generate 15.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. Banco BTG Pactual
Performance |
| Timeline |
| iShares Trust |
| Banco BTG Pactual |
IShares Trust and Banco BTG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Banco BTG
The main advantage of trading using opposite IShares Trust and Banco BTG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, Banco BTG 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 Banco BTG will offset losses from the drop in Banco BTG's long position.| IShares Trust vs. iShares BMFBovespa Small | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares iShares |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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