Correlation Between BICE11 and BB Renda

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

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

Diversification Opportunities for BICE11 and BB Renda

-0.73

Correlation Coefficient

BICE11  BB Renda

Pay attention - limited upside

The 3 months correlation between BICE11 and BBRC11 is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding BICE11 and BB Renda Corporativa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Renda Corporativa and BICE11 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 BICE11 are associated (or correlated) with BB Renda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Renda Corporativa has no effect on the direction of BICE11 i.e., BICE11 and BB Renda go up and down completely randomly.

Pair Corralation between BICE11 and BB Renda

Assuming the 90 days trading horizon BICE11 is expected to generate 0.12 times more return on investment than BB Renda. However, BICE11 is 8.31 times less risky than BB Renda. It trades about 0.24 of its potential returns per unit of risk. BB Renda Corporativa is currently generating about -0.07 per unit of risk. If you would invest  88,480  in BICE11 on April 24, 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	98.41%
Values	Daily Returns

BICE11  vs.  BB Renda Corporativa

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.

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.

Pair Trading with BICE11 and BB Renda

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

The idea behind BICE11 and BB Renda Corporativa 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.