Correlation Between Weg ADM and BTG Pactual

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

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

Diversification Opportunities for Weg ADM and BTG Pactual

-0.65

Correlation Coefficient

Weg ADM  BTG Pactual

Excellent diversification

The 3 months correlation between Weg and BTG is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Weg ADM General and BTG Pactual Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTG Pactual Chile and Weg ADM 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 Weg ADM General 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 Chile has no effect on the direction of Weg ADM i.e., Weg ADM and BTG Pactual go up and down completely randomly.

Pair Corralation between Weg ADM and BTG Pactual

Assuming the 90 days trading horizon Weg ADM General is expected to under-perform the BTG Pactual. In addition to that, Weg ADM is 1.74 times more volatile than BTG Pactual Chile. It trades about -0.16 of its total potential returns per unit of risk. BTG Pactual Chile is currently generating about 0.2 per unit of volatility. If you would invest  1,043,629  in BTG Pactual Chile on September 3, 2024 and sell it today you would earn a total of  76,371  from holding BTG Pactual Chile or generate 7.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Weg ADM General  vs.  BTG Pactual Chile

Weg ADM General

Risk-Adjusted Performance

0 of 100

Very Weak

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

BTG Pactual Chile

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BTG Pactual Chile are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, BTG Pactual may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Weg ADM and BTG Pactual

The main advantage of trading using opposite Weg ADM and BTG Pactual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weg ADM 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 Weg ADM General and BTG Pactual Chile 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.