Correlation Between Banco BTG and BlackRock

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

Diversification Opportunities for Banco BTG and BlackRock

-0.43

Correlation Coefficient

Banco BTG  BlackRock

Very good diversification

The 3 months correlation between Banco and BlackRock is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Banco BTG Pactual and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock 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 BlackRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock has no effect on the direction of Banco BTG i.e., Banco BTG and BlackRock go up and down completely randomly.

Pair Corralation between Banco BTG and BlackRock

Assuming the 90 days trading horizon Banco BTG Pactual is expected to under-perform the BlackRock. In addition to that, Banco BTG is 1.8 times more volatile than BlackRock. It trades about -0.04 of its total potential returns per unit of risk. BlackRock is currently generating about 0.21 per unit of volatility. If you would invest  8,483  in BlackRock on September 26, 2024 and sell it today you would earn a total of  1,264  from holding BlackRock or generate 14.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Banco BTG Pactual  vs.  BlackRock

Banco BTG Pactual

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco BTG Pactual has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Banco BTG is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

BlackRock

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BlackRock sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banco BTG and BlackRock

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

The idea behind Banco BTG Pactual and BlackRock 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.