Correlation Between Movida Participaes and Banco BTG
Can any of the company-specific risk be diversified away by investing in both Movida Participaes 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 Movida Participaes and Banco BTG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Movida Participaes SA and Banco BTG Pactual, you can compare the effects of market volatilities on Movida Participaes 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 Movida Participaes with a short position of Banco BTG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Movida Participaes and Banco BTG.
Diversification Opportunities for Movida Participaes and Banco BTG
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Movida and Banco is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Movida Participaes SA 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 Movida Participaes 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 Movida Participaes SA 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 Movida Participaes i.e., Movida Participaes and Banco BTG go up and down completely randomly.
Pair Corralation between Movida Participaes and Banco BTG
Assuming the 90 days trading horizon Movida Participaes is expected to generate 2.39 times less return on investment than Banco BTG. In addition to that, Movida Participaes is 1.76 times more volatile than Banco BTG Pactual. It trades about 0.01 of its total potential returns per unit of risk. Banco BTG Pactual is currently generating about 0.05 per unit of volatility. If you would invest 2,319 in Banco BTG Pactual on August 24, 2024 and sell it today you would earn a total of 1,011 from holding Banco BTG Pactual or generate 43.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Movida Participaes SA vs. Banco BTG Pactual
Performance |
| Timeline |
| Movida Participaes |
| Banco BTG Pactual |
Movida Participaes and Banco BTG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Movida Participaes and Banco BTG
The main advantage of trading using opposite Movida Participaes and Banco BTG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Movida Participaes 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.| Movida Participaes vs. Petro Rio SA | Movida Participaes vs. Localiza Rent a | Movida Participaes vs. Banco BTG Pactual | Movida Participaes vs. CVC Brasil Operadora |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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