Correlation Between BTG Pactual and IShares IShares

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

Diversification Opportunities for BTG Pactual and IShares IShares

0.27

Correlation Coefficient

BTG Pactual  IShares IShares

Modest diversification

The 3 months correlation between BTG and IShares is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding BTG Pactual Logstica and iShares iShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iShares 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 IShares IShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iShares has no effect on the direction of BTG Pactual i.e., BTG Pactual and IShares IShares go up and down completely randomly.

Pair Corralation between BTG Pactual and IShares IShares

Assuming the 90 days trading horizon BTG Pactual Logstica is expected to under-perform the IShares IShares. But the fund apears to be less risky and, when comparing its historical volatility, BTG Pactual Logstica is 1.62 times less risky than IShares IShares. The fund trades about -0.3 of its potential returns per unit of risk. The iShares iShares is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  5,550  in iShares iShares on September 5, 2024 and sell it today you would lose (40.00) from holding iShares iShares or give up 0.72% of portfolio value over 90 days.

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

BTG Pactual Logstica  vs.  iShares iShares

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 latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

iShares iShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares iShares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IShares IShares 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 IShares IShares

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

The idea behind BTG Pactual Logstica and iShares iShares 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.