Correlation Between MBI Administradora and BTG Pactual

Can any of the company-specific risk be diversified away by investing in both MBI Administradora and BTG Pactual 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 MBI Administradora and BTG Pactual into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MBI Administradora General and BTG Pactual Chile, you can compare the effects of market volatilities on MBI Administradora and BTG Pactual 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 MBI Administradora with a short position of BTG Pactual. Check out your portfolio center. Please also check ongoing floating volatility patterns of MBI Administradora and BTG Pactual.

Diversification Opportunities for MBI Administradora and BTG Pactual

-0.71

Correlation Coefficient

MBI Administradora  BTG Pactual

Pay attention - limited upside

The 3 months correlation between MBI and BTG is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding MBI Administradora General and BTG Pactual Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTG Pactual Chile and MBI Administradora 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 MBI Administradora General are associated (or correlated) with BTG Pactual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTG Pactual Chile has no effect on the direction of MBI Administradora i.e., MBI Administradora and BTG Pactual go up and down completely randomly.

Pair Corralation between MBI Administradora and BTG Pactual

Assuming the 90 days trading horizon MBI Administradora General is expected to under-perform the BTG Pactual. In addition to that, MBI Administradora is 1.08 times more volatile than BTG Pactual Chile. It trades about -0.05 of its total potential returns per unit of risk. BTG Pactual Chile is currently generating about 0.12 per unit of volatility. If you would invest  1,097,377  in BTG Pactual Chile on December 25, 2024 and sell it today you would earn a total of  182,623  from holding BTG Pactual Chile or generate 16.64% return on investment over 90 days.

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

MBI Administradora General  vs.  BTG Pactual Chile

MBI Administradora

Risk-Adjusted Performance

Very Weak

Over the last 90 days MBI Administradora General has generated negative risk-adjusted returns adding no value to fund investors. Even with latest fragile performance, the Fund's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the fund retail investors.

BTG Pactual Chile

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BTG Pactual Chile are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly unsteady technical and fundamental indicators, BTG Pactual reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MBI Administradora and BTG Pactual

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

The idea behind MBI Administradora General and BTG Pactual Chile 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 Transaction History module to view history of all your transactions and understand their impact on performance.