Correlation Between Btg Pactual and Faria Lima

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

Diversification Opportunities for Btg Pactual and Faria Lima

0.13

Correlation Coefficient

Btg Pactual  Faria Lima

Average diversification

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

Pair Corralation between Btg Pactual and Faria Lima

Assuming the 90 days trading horizon Btg Pactual Real is expected to under-perform the Faria Lima. In addition to that, Btg Pactual is 1.34 times more volatile than Faria Lima Capital. It trades about -0.81 of its total potential returns per unit of risk. Faria Lima Capital is currently generating about 0.13 per unit of volatility. If you would invest  9,640  in Faria Lima Capital on October 24, 2024 and sell it today you would earn a total of  159.00  from holding Faria Lima Capital or generate 1.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Btg Pactual Real  vs.  Faria Lima Capital

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.

Faria Lima Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Faria Lima Capital are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong fundamental indicators, Faria Lima 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 Faria Lima

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

The idea behind Btg Pactual Real and Faria Lima Capital 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.