Correlation Between Plano Plano and IShares BMFBovespa

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

By analyzing existing cross correlation between Plano Plano Desenvolvimento and iShares BMFBovespa Small, you can compare the effects of market volatilities on Plano Plano and IShares BMFBovespa 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 Plano Plano with a short position of IShares BMFBovespa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plano Plano and IShares BMFBovespa.

Diversification Opportunities for Plano Plano and IShares BMFBovespa

0.9

Correlation Coefficient

Plano Plano  IShares BMFBovespa

Almost no diversification

The 3 months correlation between Plano and IShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Plano Plano Desenvolvimento and iShares BMFBovespa Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares BMFBovespa Small and Plano Plano 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 Plano Plano Desenvolvimento are associated (or correlated) with IShares BMFBovespa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares BMFBovespa Small has no effect on the direction of Plano Plano i.e., Plano Plano and IShares BMFBovespa go up and down completely randomly.

Pair Corralation between Plano Plano and IShares BMFBovespa

Assuming the 90 days trading horizon Plano Plano Desenvolvimento is expected to generate 2.45 times more return on investment than IShares BMFBovespa. However, Plano Plano is 2.45 times more volatile than iShares BMFBovespa Small. It trades about 0.17 of its potential returns per unit of risk. iShares BMFBovespa Small is currently generating about 0.12 per unit of risk. If you would invest  848.00  in Plano Plano Desenvolvimento on December 25, 2024 and sell it today you would earn a total of  307.00  from holding Plano Plano Desenvolvimento or generate 36.2% return on investment over 90 days.

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

Plano Plano Desenvolvimento  vs.  iShares BMFBovespa Small

Plano Plano Desenvol

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plano Plano Desenvolvimento are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Plano Plano unveiled solid returns over the last few months and may actually be approaching a breakup point.

iShares BMFBovespa Small

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares BMFBovespa Small are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IShares BMFBovespa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Plano Plano and IShares BMFBovespa

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

The idea behind Plano Plano Desenvolvimento and iShares BMFBovespa Small 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.