Correlation Between BTG Pactual and Tordesilhas

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Can any of the company-specific risk be diversified away by investing in both BTG Pactual and Tordesilhas 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 BTG Pactual and Tordesilhas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTG Pactual Logstica and Tordesilhas Ei Fundo, you can compare the effects of market volatilities on BTG Pactual and Tordesilhas 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 BTG Pactual with a short position of Tordesilhas. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTG Pactual and Tordesilhas.

Diversification Opportunities for BTG Pactual and Tordesilhas

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between BTG and Tordesilhas is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding BTG Pactual Logstica and Tordesilhas Ei Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tordesilhas Ei Fundo and BTG Pactual 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 BTG Pactual Logstica are associated (or correlated) with Tordesilhas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tordesilhas Ei Fundo has no effect on the direction of BTG Pactual i.e., BTG Pactual and Tordesilhas go up and down completely randomly.

Pair Corralation between BTG Pactual and Tordesilhas

Assuming the 90 days trading horizon BTG Pactual Logstica is expected to generate 1.22 times more return on investment than Tordesilhas. However, BTG Pactual is 1.22 times more volatile than Tordesilhas Ei Fundo. It trades about -0.15 of its potential returns per unit of risk. Tordesilhas Ei Fundo is currently generating about -0.23 per unit of risk. If you would invest  10,096  in BTG Pactual Logstica on September 12, 2024 and sell it today you would lose (1,116) from holding BTG Pactual Logstica or give up 11.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

BTG Pactual Logstica  vs.  Tordesilhas Ei Fundo

 Performance 
       Timeline  
BTG Pactual Logstica 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BTG Pactual Logstica has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak 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.
Tordesilhas Ei Fundo 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Tordesilhas Ei Fundo has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

BTG Pactual and Tordesilhas Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BTG Pactual and Tordesilhas

The main advantage of trading using opposite BTG Pactual and Tordesilhas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTG Pactual position performs unexpectedly, Tordesilhas 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 Tordesilhas will offset losses from the drop in Tordesilhas' long position.
The idea behind BTG Pactual Logstica and Tordesilhas Ei Fundo 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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