Correlation Between Btg Pactual and Btsp II

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

Diversification Opportunities for Btg Pactual and Btsp II

0.32

Correlation Coefficient

Btg Pactual  Btsp II

Weak diversification

The 3 months correlation between Btg and Btsp is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Btg Pactual Real and Btsp II Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Btsp II Fundo 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 Btsp II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Btsp II Fundo has no effect on the direction of Btg Pactual i.e., Btg Pactual and Btsp II go up and down completely randomly.

Pair Corralation between Btg Pactual and Btsp II

Assuming the 90 days trading horizon Btg Pactual Real is expected to under-perform the Btsp II. In addition to that, Btg Pactual is 6.1 times more volatile than Btsp II Fundo. It trades about -0.98 of its total potential returns per unit of risk. Btsp II Fundo is currently generating about 0.08 per unit of volatility. If you would invest  11,083  in Btsp II Fundo on October 25, 2024 and sell it today you would earn a total of  77.00  from holding Btsp II Fundo or generate 0.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	41.38%
Values	Daily Returns

Btg Pactual Real  vs.  Btsp II Fundo

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.

Btsp II Fundo

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Btsp II Fundo are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Btsp II is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Btg Pactual and Btsp II

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

The idea behind Btg Pactual Real and Btsp II Fundo 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.