Correlation Between Sp Downtown and BB Seguridade
Can any of the company-specific risk be diversified away by investing in both Sp Downtown and BB Seguridade 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 Sp Downtown and BB Seguridade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sp Downtown Fundo and BB Seguridade Participacoes, you can compare the effects of market volatilities on Sp Downtown and BB Seguridade 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 Sp Downtown with a short position of BB Seguridade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp Downtown and BB Seguridade.
Diversification Opportunities for Sp Downtown and BB Seguridade
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPTW11 and BBSE3 is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sp Downtown Fundo and BB Seguridade Participacoes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Seguridade Partic and Sp Downtown 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 Sp Downtown Fundo are associated (or correlated) with BB Seguridade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Seguridade Partic has no effect on the direction of Sp Downtown i.e., Sp Downtown and BB Seguridade go up and down completely randomly.
Pair Corralation between Sp Downtown and BB Seguridade
Assuming the 90 days trading horizon Sp Downtown Fundo is expected to generate 2.99 times more return on investment than BB Seguridade. However, Sp Downtown is 2.99 times more volatile than BB Seguridade Participacoes. It trades about 0.03 of its potential returns per unit of risk. BB Seguridade Participacoes is currently generating about -0.04 per unit of risk. If you would invest 3,649 in Sp Downtown Fundo on August 28, 2024 and sell it today you would earn a total of 30.00 from holding Sp Downtown Fundo or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sp Downtown Fundo vs. BB Seguridade Participacoes
Performance |
| Timeline |
| Sp Downtown Fundo |
| BB Seguridade Partic |
Sp Downtown and BB Seguridade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sp Downtown and BB Seguridade
The main advantage of trading using opposite Sp Downtown and BB Seguridade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp Downtown position performs unexpectedly, BB Seguridade 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 BB Seguridade will offset losses from the drop in BB Seguridade's long position.| Sp Downtown vs. BTG Pactual Logstica | Sp Downtown vs. Plano Plano Desenvolvimento | Sp Downtown vs. Companhia Habitasul de | Sp Downtown vs. The Procter Gamble |
| BB Seguridade vs. Transmissora Aliana de | BB Seguridade vs. Banco do Brasil | BB Seguridade vs. Itasa Investimentos | BB Seguridade vs. Engie Brasil Energia |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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