Correlation Between BTG Pactual and Brio Real

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

Diversification Opportunities for BTG Pactual and Brio Real

0.36

Correlation Coefficient

BTG Pactual  Brio Real

Weak diversification

The 3 months correlation between BTG and Brio is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding BTG Pactual Logstica and Brio Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brio Real Estate 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 Brio Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brio Real Estate has no effect on the direction of BTG Pactual i.e., BTG Pactual and Brio Real go up and down completely randomly.

Pair Corralation between BTG Pactual and Brio Real

Assuming the 90 days trading horizon BTG Pactual Logstica is expected to under-perform the Brio Real. But the fund apears to be less risky and, when comparing its historical volatility, BTG Pactual Logstica is 2.64 times less risky than Brio Real. The fund trades about -0.05 of its potential returns per unit of risk. The Brio Real Estate is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  77,113  in Brio Real Estate on December 5, 2024 and sell it today you would earn a total of  12,687  from holding Brio Real Estate or generate 16.45% return on investment over 90 days.

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

BTG Pactual Logstica  vs.  Brio Real Estate

BTG Pactual Logstica

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BTG Pactual Logstica are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak essential indicators, BTG Pactual may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Brio Real Estate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brio Real Estate are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak forward indicators, Brio Real sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BTG Pactual and Brio Real

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

The idea behind BTG Pactual Logstica and Brio Real Estate 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.