Correlation Between Banco BTG and Mliuz SA

Can any of the company-specific risk be diversified away by investing in both Banco BTG and Mliuz 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 Banco BTG and Mliuz SA 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 Mliuz SA, you can compare the effects of market volatilities on Banco BTG and Mliuz 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 Banco BTG with a short position of Mliuz SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco BTG and Mliuz SA.

Diversification Opportunities for Banco BTG and Mliuz SA

0.76

Correlation Coefficient

Banco BTG  Mliuz SA

Poor diversification

The 3 months correlation between Banco and Mliuz is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Banco BTG Pactual and Mliuz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mliuz SA 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 Mliuz SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mliuz SA has no effect on the direction of Banco BTG i.e., Banco BTG and Mliuz SA go up and down completely randomly.

Pair Corralation between Banco BTG and Mliuz SA

Assuming the 90 days trading horizon Banco BTG is expected to generate 1.13 times less return on investment than Mliuz SA. But when comparing it to its historical volatility, Banco BTG Pactual is 2.43 times less risky than Mliuz SA. It trades about 0.26 of its potential returns per unit of risk. Mliuz SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  270.00  in Mliuz SA on December 31, 2024 and sell it today you would earn a total of  77.00  from holding Mliuz SA or generate 28.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Banco BTG Pactual  vs.  Mliuz SA

Banco BTG Pactual

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Banco BTG Pactual are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Banco BTG sustained solid returns over the last few months and may actually be approaching a breakup point.

Mliuz SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mliuz SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mliuz SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banco BTG and Mliuz SA

The main advantage of trading using opposite Banco BTG and Mliuz SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco BTG position performs unexpectedly, Mliuz 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 Mliuz SA will offset losses from the drop in Mliuz SA's long position.

The idea behind Banco BTG Pactual and Mliuz SA 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.

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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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.