Correlation Between IShares Ibovespa and Wetzel SA

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

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

Diversification Opportunities for IShares Ibovespa and Wetzel SA

-0.54

Correlation Coefficient

IShares Ibovespa  Wetzel SA

Excellent diversification

The 3 months correlation between IShares and Wetzel is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding iShares Ibovespa Index and Wetzel SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wetzel SA and IShares Ibovespa 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 Ibovespa Index are associated (or correlated) with Wetzel SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wetzel SA has no effect on the direction of IShares Ibovespa i.e., IShares Ibovespa and Wetzel SA go up and down completely randomly.

Pair Corralation between IShares Ibovespa and Wetzel SA

Assuming the 90 days trading horizon iShares Ibovespa Index is expected to under-perform the Wetzel SA. But the etf apears to be less risky and, when comparing its historical volatility, iShares Ibovespa Index is 9.11 times less risky than Wetzel SA. The etf trades about -0.12 of its potential returns per unit of risk. The Wetzel SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  920.00  in Wetzel SA on August 30, 2024 and sell it today you would earn a total of  581.00  from holding Wetzel SA or generate 63.15% return on investment over 90 days.

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

iShares Ibovespa Index  vs.  Wetzel SA

iShares Ibovespa Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Ibovespa Index has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IShares Ibovespa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wetzel SA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wetzel SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wetzel SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Ibovespa and Wetzel SA

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

The idea behind iShares Ibovespa Index and Wetzel SA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.