Correlation Between IShares Trust and BTG Pactual

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

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

Diversification Opportunities for IShares Trust and BTG Pactual

-0.51

Correlation Coefficient

IShares Trust  BTG Pactual

Excellent diversification

The 3 months correlation between IShares and BTG is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust 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 IShares Trust 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 iShares Trust 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 IShares Trust i.e., IShares Trust and BTG Pactual go up and down completely randomly.

Pair Corralation between IShares Trust and BTG Pactual

Assuming the 90 days trading horizon iShares Trust is expected to generate 1.06 times more return on investment than BTG Pactual. However, IShares Trust is 1.06 times more volatile than BTG Pactual Logstica. It trades about 0.09 of its potential returns per unit of risk. BTG Pactual Logstica is currently generating about -0.13 per unit of risk. If you would invest  8,393  in iShares Trust on September 22, 2024 and sell it today you would earn a total of  581.00  from holding iShares Trust or generate 6.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

iShares Trust   vs.  BTG Pactual Logstica

iShares Trust

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IShares Trust may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BTG Pactual Logstica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BTG Pactual Logstica has generated negative risk-adjusted returns adding no value to fund investors. Despite latest uncertain performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with IShares Trust and BTG Pactual

The main advantage of trading using opposite IShares Trust and BTG Pactual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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 iShares Trust 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.