Correlation Between IShares BMFBovespa and Investo Etf

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

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

Diversification Opportunities for IShares BMFBovespa and Investo Etf

-0.38

Correlation Coefficient

IShares BMFBovespa  Investo Etf

Very good diversification

The 3 months correlation between IShares and Investo is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding iShares BMFBovespa Small and Investo Etf Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investo Etf Global and IShares BMFBovespa 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 BMFBovespa Small are associated (or correlated) with Investo Etf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investo Etf Global has no effect on the direction of IShares BMFBovespa i.e., IShares BMFBovespa and Investo Etf go up and down completely randomly.

Pair Corralation between IShares BMFBovespa and Investo Etf

Assuming the 90 days trading horizon iShares BMFBovespa Small is expected to under-perform the Investo Etf. In addition to that, IShares BMFBovespa is 1.5 times more volatile than Investo Etf Global. It trades about -0.09 of its total potential returns per unit of risk. Investo Etf Global is currently generating about 0.11 per unit of volatility. If you would invest  8,579  in Investo Etf Global on September 3, 2024 and sell it today you would earn a total of  571.00  from holding Investo Etf Global or generate 6.66% return on investment over 90 days.

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

iShares BMFBovespa Small  vs.  Investo Etf Global

iShares BMFBovespa Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares BMFBovespa Small has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Investo Etf Global

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Investo Etf Global are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Investo Etf may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares BMFBovespa and Investo Etf

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

The idea behind iShares BMFBovespa Small and Investo Etf Global 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 CEOs Directory module to screen CEOs from public companies around the world.