Correlation Between I1VZ34 and Banco BTG

Can any of the company-specific risk be diversified away by investing in both I1VZ34 and Banco BTG 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 I1VZ34 and Banco BTG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between I1VZ34 and Banco BTG Pactual, you can compare the effects of market volatilities on I1VZ34 and Banco BTG 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 I1VZ34 with a short position of Banco BTG. Check out your portfolio center. Please also check ongoing floating volatility patterns of I1VZ34 and Banco BTG.

Diversification Opportunities for I1VZ34 and Banco BTG

-0.69

Correlation Coefficient

I1VZ34  Banco BTG

Excellent diversification

The 3 months correlation between I1VZ34 and Banco is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding I1VZ34 and Banco BTG Pactual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco BTG Pactual and I1VZ34 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 I1VZ34 are associated (or correlated) with Banco BTG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco BTG Pactual has no effect on the direction of I1VZ34 i.e., I1VZ34 and Banco BTG go up and down completely randomly.

Pair Corralation between I1VZ34 and Banco BTG

Assuming the 90 days trading horizon I1VZ34 is expected to generate 0.89 times more return on investment than Banco BTG. However, I1VZ34 is 1.12 times less risky than Banco BTG. It trades about 0.13 of its potential returns per unit of risk. Banco BTG Pactual is currently generating about -0.09 per unit of risk. If you would invest  9,526  in I1VZ34 on September 29, 2024 and sell it today you would earn a total of  1,672  from holding I1VZ34 or generate 17.55% return on investment over 90 days.

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

I1VZ34  vs.  Banco BTG Pactual

I1VZ34

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in I1VZ34 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, I1VZ34 sustained solid returns over the last few months and may actually be approaching a breakup point.

Banco BTG Pactual

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco BTG Pactual has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with I1VZ34 and Banco BTG

The main advantage of trading using opposite I1VZ34 and Banco BTG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I1VZ34 position performs unexpectedly, Banco BTG 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 Banco BTG will offset losses from the drop in Banco BTG's long position.

The idea behind I1VZ34 and Banco BTG Pactual 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.