Correlation Between SPARTA FIAGRO and BTG Pactual

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

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

Diversification Opportunities for SPARTA FIAGRO and BTG Pactual

0.67

Correlation Coefficient

SPARTA FIAGRO  BTG Pactual

Poor diversification

The 3 months correlation between SPARTA and BTG is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding SPARTA FIAGRO FDO and BTG Pactual Logstica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTG Pactual Logstica and SPARTA FIAGRO 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 SPARTA FIAGRO FDO 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 Logstica has no effect on the direction of SPARTA FIAGRO i.e., SPARTA FIAGRO and BTG Pactual go up and down completely randomly.

Pair Corralation between SPARTA FIAGRO and BTG Pactual

Assuming the 90 days trading horizon SPARTA FIAGRO FDO is expected to under-perform the BTG Pactual. But the fund apears to be less risky and, when comparing its historical volatility, SPARTA FIAGRO FDO is 1.36 times less risky than BTG Pactual. The fund trades about -0.05 of its potential returns per unit of risk. The BTG Pactual Logstica is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  9,500  in BTG Pactual Logstica on November 28, 2024 and sell it today you would earn a total of  77.00  from holding BTG Pactual Logstica or generate 0.81% return on investment over 90 days.

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

SPARTA FIAGRO FDO  vs.  BTG Pactual Logstica

SPARTA FIAGRO FDO

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPARTA FIAGRO FDO has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, SPARTA FIAGRO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BTG Pactual Logstica

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BTG Pactual Logstica are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with SPARTA FIAGRO and BTG Pactual

The main advantage of trading using opposite SPARTA FIAGRO and BTG Pactual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPARTA FIAGRO 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 SPARTA FIAGRO FDO and BTG Pactual Logstica 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.