Correlation Between Banco BTG and Banco BTG
Can any of the company-specific risk be diversified away by investing in both Banco BTG 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 Banco BTG and Banco BTG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco BTG Pactual and Banco BTG Pactual, you can compare the effects of market volatilities on Banco BTG 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 Banco BTG with a short position of Banco BTG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco BTG and Banco BTG.
Diversification Opportunities for Banco BTG and Banco BTG
Very poor diversification
The 3 months correlation between Banco and Banco is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Banco BTG Pactual 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 Banco BTG 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 Banco BTG Pactual 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 Banco BTG i.e., Banco BTG and Banco BTG go up and down completely randomly.
Pair Corralation between Banco BTG and Banco BTG
Assuming the 90 days trading horizon Banco BTG is expected to generate 2.03 times less return on investment than Banco BTG. But when comparing it to its historical volatility, Banco BTG Pactual is 1.51 times less risky than Banco BTG. It trades about 0.07 of its potential returns per unit of risk. Banco BTG Pactual is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 742.00 in Banco BTG Pactual on November 28, 2024 and sell it today you would earn a total of 38.00 from holding Banco BTG Pactual or generate 5.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Banco BTG Pactual vs. Banco BTG Pactual
Performance |
| Timeline |
| Banco BTG Pactual |
| Banco BTG Pactual |
Banco BTG and Banco BTG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco BTG and Banco BTG
The main advantage of trading using opposite Banco BTG and Banco BTG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco BTG 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.The idea behind Banco BTG Pactual and Banco BTG Pactual 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.| Banco BTG vs. Banco BTG Pactual | Banco BTG vs. Banco BTG Pactual | Banco BTG vs. Banco Santander SA | Banco BTG vs. Banco Santander SA |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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