Correlation Between BB Renda and BICE11

Can any of the company-specific risk be diversified away by investing in both BB Renda and BICE11 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 BB Renda and BICE11 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BB Renda Corporativa and BICE11, you can compare the effects of market volatilities on BB Renda and BICE11 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 BB Renda with a short position of BICE11. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Renda and BICE11.

Diversification Opportunities for BB Renda and BICE11

-0.68

Correlation Coefficient

BB Renda  BICE11

Excellent diversification

The 3 months correlation between BBRC11 and BICE11 is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding BB Renda Corporativa and BICE11 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BICE11 and BB Renda 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 BB Renda Corporativa are associated (or correlated) with BICE11. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BICE11 has no effect on the direction of BB Renda i.e., BB Renda and BICE11 go up and down completely randomly.

Pair Corralation between BB Renda and BICE11

Assuming the 90 days trading horizon BB Renda Corporativa is expected to under-perform the BICE11. In addition to that, BB Renda is 9.67 times more volatile than BICE11. It trades about -0.06 of its total potential returns per unit of risk. BICE11 is currently generating about 0.24 per unit of volatility. If you would invest  88,480  in BICE11 on April 20, 2025 and sell it today you would earn a total of  1,420  from holding BICE11 or generate 1.6% return on investment over 90 days.

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

BB Renda Corporativa  vs.  BICE11

BB Renda Corporativa

Risk-Adjusted Performance

Very Weak

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

BICE11

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BICE11 are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong fundamental indicators, BICE11 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BB Renda and BICE11

The main advantage of trading using opposite BB Renda and BICE11 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Renda position performs unexpectedly, BICE11 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 BICE11 will offset losses from the drop in BICE11's long position.

The idea behind BB Renda Corporativa and BICE11 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.