Correlation Between BTG Pactual and Iron Mountain

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

Diversification Opportunities for BTG Pactual and Iron Mountain

-0.21

Correlation Coefficient

BTG Pactual  Iron Mountain

Very good diversification

The 3 months correlation between BTG and Iron is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding BTG Pactual Logstica and Iron Mountain Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain 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 Iron Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Mountain has no effect on the direction of BTG Pactual i.e., BTG Pactual and Iron Mountain go up and down completely randomly.

Pair Corralation between BTG Pactual and Iron Mountain

Assuming the 90 days trading horizon BTG Pactual Logstica is expected to generate 1.25 times more return on investment than Iron Mountain. However, BTG Pactual is 1.25 times more volatile than Iron Mountain Incorporated. It trades about 0.12 of its potential returns per unit of risk. Iron Mountain Incorporated is currently generating about -0.42 per unit of risk. If you would invest  9,130  in BTG Pactual Logstica on October 7, 2024 and sell it today you would earn a total of  336.00  from holding BTG Pactual Logstica or generate 3.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

BTG Pactual Logstica  vs.  Iron Mountain Incorporated

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.

Iron Mountain

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind BTG Pactual Logstica and Iron Mountain Incorporated 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.