Correlation Between Banco BTG and Bradespar

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

Diversification Opportunities for Banco BTG and Bradespar

-0.13

Correlation Coefficient

Banco BTG  Bradespar

Good diversification

The 3 months correlation between Banco and Bradespar is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Banco BTG Pactual and Bradespar SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bradespar 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 Bradespar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bradespar SA has no effect on the direction of Banco BTG i.e., Banco BTG and Bradespar go up and down completely randomly.

Pair Corralation between Banco BTG and Bradespar

Assuming the 90 days trading horizon Banco BTG Pactual is expected to generate 1.35 times more return on investment than Bradespar. However, Banco BTG is 1.35 times more volatile than Bradespar SA. It trades about 0.04 of its potential returns per unit of risk. Bradespar SA is currently generating about 0.0 per unit of risk. If you would invest  595.00  in Banco BTG Pactual on August 31, 2024 and sell it today you would earn a total of  193.00  from holding Banco BTG Pactual or generate 32.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.75%
Values	Daily Returns

Banco BTG Pactual  vs.  Bradespar SA

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 uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bradespar SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Banco BTG and Bradespar

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

The idea behind Banco BTG Pactual and Bradespar 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.