Correlation Between BTG Pactual and WEG SA
Can any of the company-specific risk be diversified away by investing in both BTG Pactual and WEG SA 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 BTG Pactual and WEG SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTG Pactual Logstica and WEG SA, you can compare the effects of market volatilities on BTG Pactual and WEG SA 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 BTG Pactual with a short position of WEG SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTG Pactual and WEG SA.
Diversification Opportunities for BTG Pactual and WEG SA
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BTG and WEG is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding BTG Pactual Logstica and WEG SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEG SA and BTG Pactual 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 BTG Pactual Logstica are associated (or correlated) with WEG SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEG SA has no effect on the direction of BTG Pactual i.e., BTG Pactual and WEG SA go up and down completely randomly.
Pair Corralation between BTG Pactual and WEG SA
Assuming the 90 days trading horizon BTG Pactual Logstica is expected to generate 0.5 times more return on investment than WEG SA. However, BTG Pactual Logstica is 2.0 times less risky than WEG SA. It trades about 0.12 of its potential returns per unit of risk. WEG SA is currently generating about -0.08 per unit of risk. If you would invest 9,540 in BTG Pactual Logstica on August 26, 2024 and sell it today you would earn a total of 168.00 from holding BTG Pactual Logstica or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BTG Pactual Logstica vs. WEG SA
Performance |
| Timeline |
| BTG Pactual Logstica |
| WEG SA |
BTG Pactual and WEG SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTG Pactual and WEG SA
The main advantage of trading using opposite BTG Pactual and WEG SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTG Pactual position performs unexpectedly, WEG SA 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 WEG SA will offset losses from the drop in WEG SA's long position.| BTG Pactual vs. Plano Plano Desenvolvimento | BTG Pactual vs. Cable One | BTG Pactual vs. ATMA Participaes SA | BTG Pactual vs. British American Tobacco |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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