Correlation Between BTG Pactual and Trend ETF

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

Diversification Opportunities for BTG Pactual and Trend ETF

0.64

Correlation Coefficient

BTG Pactual  Trend ETF

Poor diversification

The 3 months correlation between BTG and Trend is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BTG Pactual Logstica and Trend ETF Ibovespa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trend ETF Ibovespa 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 Trend ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trend ETF Ibovespa has no effect on the direction of BTG Pactual i.e., BTG Pactual and Trend ETF go up and down completely randomly.

Pair Corralation between BTG Pactual and Trend ETF

Assuming the 90 days trading horizon BTG Pactual Logstica is expected to under-perform the Trend ETF. In addition to that, BTG Pactual is 1.38 times more volatile than Trend ETF Ibovespa. It trades about -0.14 of its total potential returns per unit of risk. Trend ETF Ibovespa is currently generating about -0.05 per unit of volatility. If you would invest  1,358  in Trend ETF Ibovespa on September 12, 2024 and sell it today you would lose (44.00) from holding Trend ETF Ibovespa or give up 3.24% of portfolio value over 90 days.

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

BTG Pactual Logstica  vs.  Trend ETF Ibovespa

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.

Trend ETF Ibovespa

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind BTG Pactual Logstica and Trend ETF Ibovespa 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.