Correlation Between BTG Pactual and EZTEC Empreendimentos

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

Diversification Opportunities for BTG Pactual and EZTEC Empreendimentos

0.64

Correlation Coefficient

BTG Pactual  EZTEC Empreendimentos

Poor diversification

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

Pair Corralation between BTG Pactual and EZTEC Empreendimentos

Assuming the 90 days trading horizon BTG Pactual Logstica is expected to generate 0.78 times more return on investment than EZTEC Empreendimentos. However, BTG Pactual Logstica is 1.29 times less risky than EZTEC Empreendimentos. It trades about -0.05 of its potential returns per unit of risk. EZTEC Empreendimentos e is currently generating about -0.33 per unit of risk. If you would invest  9,689  in BTG Pactual Logstica on September 25, 2024 and sell it today you would lose (289.00) from holding BTG Pactual Logstica or give up 2.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

BTG Pactual Logstica  vs.  EZTEC Empreendimentos e

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 newest stock price disturbance, may contribute to short-term losses for the investors.

EZTEC Empreendimentos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EZTEC Empreendimentos e has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BTG Pactual and EZTEC Empreendimentos

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

The idea behind BTG Pactual Logstica and EZTEC Empreendimentos e 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 Global Correlations module to find global opportunities by holding instruments from different markets.