Correlation Between Raia Drogasil and Banco BTG
Can any of the company-specific risk be diversified away by investing in both Raia Drogasil 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 Raia Drogasil and Banco BTG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raia Drogasil SA and Banco BTG Pactual, you can compare the effects of market volatilities on Raia Drogasil 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 Raia Drogasil with a short position of Banco BTG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raia Drogasil and Banco BTG.
Diversification Opportunities for Raia Drogasil and Banco BTG
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Raia and Banco is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Raia Drogasil SA 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 Raia Drogasil 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 Raia Drogasil SA 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 Raia Drogasil i.e., Raia Drogasil and Banco BTG go up and down completely randomly.
Pair Corralation between Raia Drogasil and Banco BTG
Assuming the 90 days trading horizon Raia Drogasil is expected to generate 2.53 times less return on investment than Banco BTG. But when comparing it to its historical volatility, Raia Drogasil SA is 1.33 times less risky than Banco BTG. It trades about 0.03 of its potential returns per unit of risk. Banco BTG Pactual is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,008 in Banco BTG Pactual on September 6, 2024 and sell it today you would earn a total of 1,064 from holding Banco BTG Pactual or generate 52.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.0% |
Values | Daily Returns |
Raia Drogasil SA vs. Banco BTG Pactual
Performance |
Timeline |
Raia Drogasil SA |
Banco BTG Pactual |
Raia Drogasil and Banco BTG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Raia Drogasil and Banco BTG
The main advantage of trading using opposite Raia Drogasil and Banco BTG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raia Drogasil 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.Raia Drogasil vs. Lojas Renner SA | Raia Drogasil vs. Hypera SA | Raia Drogasil vs. Fleury SA | Raia Drogasil vs. Localiza Rent a |
Check out your portfolio center.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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance |