Correlation Between Banco BTG and Ameriprise Financial

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

Diversification Opportunities for Banco BTG and Ameriprise Financial

-0.51

Correlation Coefficient

Banco BTG  Ameriprise Financial

Excellent diversification

The 3 months correlation between Banco and Ameriprise is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Banco BTG Pactual and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial 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 Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of Banco BTG i.e., Banco BTG and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Banco BTG and Ameriprise Financial

Assuming the 90 days trading horizon Banco BTG Pactual is expected to generate 1.87 times more return on investment than Ameriprise Financial. However, Banco BTG is 1.87 times more volatile than Ameriprise Financial. It trades about 0.03 of its potential returns per unit of risk. Ameriprise Financial is currently generating about -0.16 per unit of risk. If you would invest  771.00  in Banco BTG Pactual on November 28, 2024 and sell it today you would earn a total of  24.00  from holding Banco BTG Pactual or generate 3.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.33%
Values	Daily Returns

Banco BTG Pactual  vs.  Ameriprise Financial

Banco BTG Pactual

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Banco BTG Pactual are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Banco BTG is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Ameriprise Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ameriprise Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Banco BTG and Ameriprise Financial

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

The idea behind Banco BTG Pactual and Ameriprise Financial 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.