Correlation Between Cable One and Banco BTG
Can any of the company-specific risk be diversified away by investing in both Cable One 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 Cable One and Banco BTG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cable One and Banco BTG Pactual, you can compare the effects of market volatilities on Cable One 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 Cable One with a short position of Banco BTG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and Banco BTG.
Diversification Opportunities for Cable One and Banco BTG
Good diversification
The 3 months correlation between Cable and Banco is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Cable One 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 Cable One 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 Cable One 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 Cable One i.e., Cable One and Banco BTG go up and down completely randomly.
Pair Corralation between Cable One and Banco BTG
Assuming the 90 days trading horizon Cable One is expected to generate 0.9 times more return on investment than Banco BTG. However, Cable One is 1.11 times less risky than Banco BTG. It trades about 0.56 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 996.00 in Cable One on September 1, 2024 and sell it today you would earn a total of 248.00 from holding Cable One or generate 24.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cable One vs. Banco BTG Pactual
Performance |
| Timeline |
| Cable One |
| Banco BTG Pactual |
Cable One and Banco BTG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cable One and Banco BTG
The main advantage of trading using opposite Cable One and Banco BTG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One 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.| Cable One vs. Taiwan Semiconductor Manufacturing | Cable One vs. Metalrgica Riosulense SA | Cable One vs. Mitsubishi UFJ Financial | Cable One vs. Tyson Foods |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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