Correlation Between BTG Pactual and Adobe

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

By analyzing existing cross correlation between BTG Pactual Logstica and Adobe Inc, you can compare the effects of market volatilities on BTG Pactual and Adobe 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 Adobe. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTG Pactual and Adobe.

Diversification Opportunities for BTG Pactual and Adobe

-0.41

Correlation Coefficient

BTG Pactual  Adobe

Very good diversification

The 3 months correlation between BTG and Adobe is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding BTG Pactual Logstica and Adobe Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adobe Inc 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 Logstica are associated (or correlated) with Adobe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adobe Inc has no effect on the direction of BTG Pactual i.e., BTG Pactual and Adobe go up and down completely randomly.

Pair Corralation between BTG Pactual and Adobe

Assuming the 90 days trading horizon BTG Pactual is expected to generate 15.84 times less return on investment than Adobe. But when comparing it to its historical volatility, BTG Pactual Logstica is 2.88 times less risky than Adobe. It trades about 0.01 of its potential returns per unit of risk. Adobe Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,592  in Adobe Inc on October 4, 2024 and sell it today you would earn a total of  1,846  from holding Adobe Inc or generate 51.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

BTG Pactual Logstica  vs.  Adobe Inc

BTG Pactual Logstica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BTG Pactual Logstica has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong essential indicators, BTG Pactual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Adobe Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adobe Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Adobe 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 Adobe

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

The idea behind BTG Pactual Logstica and Adobe Inc 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .