Correlation Between Btg Pactual and BB Renda

Can any of the company-specific risk be diversified away by investing in both Btg Pactual and BB Renda 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 Btg Pactual and BB Renda into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Btg Pactual Real and BB Renda Corporativa, you can compare the effects of market volatilities on Btg Pactual and BB Renda 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 Btg Pactual with a short position of BB Renda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Btg Pactual and BB Renda.

Diversification Opportunities for Btg Pactual and BB Renda

-0.57

Correlation Coefficient

Btg Pactual  BB Renda

Excellent diversification

The 3 months correlation between Btg and BBRC11 is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Btg Pactual Real and BB Renda Corporativa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Renda Corporativa and Btg Pactual 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 Btg Pactual Real are associated (or correlated) with BB Renda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Renda Corporativa has no effect on the direction of Btg Pactual i.e., Btg Pactual and BB Renda go up and down completely randomly.

Pair Corralation between Btg Pactual and BB Renda

Assuming the 90 days trading horizon Btg Pactual Real is expected to under-perform the BB Renda. But the fund apears to be less risky and, when comparing its historical volatility, Btg Pactual Real is 1.09 times less risky than BB Renda. The fund trades about -0.84 of its potential returns per unit of risk. The BB Renda Corporativa is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest  9,946  in BB Renda Corporativa on October 25, 2024 and sell it today you would lose (448.00) from holding BB Renda Corporativa or give up 4.5% of portfolio value over 90 days.

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

Btg Pactual Real  vs.  BB Renda Corporativa

Btg Pactual Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Btg Pactual Real has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's technical indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

BB Renda Corporativa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BB Renda Corporativa has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Btg Pactual and BB Renda

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

The idea behind Btg Pactual Real and BB Renda Corporativa 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.