Correlation Between NAVI CRDITO and BTG Pactual

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

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

Diversification Opportunities for NAVI CRDITO and BTG Pactual

0.08

Correlation Coefficient

NAVI CRDITO  BTG Pactual

Significant diversification

The 3 months correlation between NAVI and BTG is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding NAVI CRDITO IMOBILIRIO 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 NAVI CRDITO 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 NAVI CRDITO IMOBILIRIO 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 NAVI CRDITO i.e., NAVI CRDITO and BTG Pactual go up and down completely randomly.

Pair Corralation between NAVI CRDITO and BTG Pactual

Assuming the 90 days trading horizon NAVI CRDITO IMOBILIRIO is expected to generate 3.23 times more return on investment than BTG Pactual. However, NAVI CRDITO is 3.23 times more volatile than BTG Pactual Logstica. It trades about -0.02 of its potential returns per unit of risk. BTG Pactual Logstica is currently generating about -0.15 per unit of risk. If you would invest  880.00  in NAVI CRDITO IMOBILIRIO on September 2, 2024 and sell it today you would lose (40.00) from holding NAVI CRDITO IMOBILIRIO or give up 4.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NAVI CRDITO IMOBILIRIO  vs.  BTG Pactual Logstica

NAVI CRDITO IMOBILIRIO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NAVI CRDITO IMOBILIRIO has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, NAVI CRDITO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 NAVI CRDITO and BTG Pactual

The main advantage of trading using opposite NAVI CRDITO and BTG Pactual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAVI CRDITO 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 NAVI CRDITO IMOBILIRIO 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.