Correlation Between IShares Ibovespa and Baumer SA

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

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

Diversification Opportunities for IShares Ibovespa and Baumer SA

0.71

Correlation Coefficient

IShares Ibovespa  Baumer SA

Poor diversification

The 3 months correlation between IShares and Baumer is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding iShares Ibovespa Index and Baumer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baumer SA and IShares Ibovespa 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 Ibovespa Index are associated (or correlated) with Baumer SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baumer SA has no effect on the direction of IShares Ibovespa i.e., IShares Ibovespa and Baumer SA go up and down completely randomly.

Pair Corralation between IShares Ibovespa and Baumer SA

Assuming the 90 days trading horizon IShares Ibovespa is expected to generate 9.74 times less return on investment than Baumer SA. But when comparing it to its historical volatility, iShares Ibovespa Index is 3.51 times less risky than Baumer SA. It trades about 0.04 of its potential returns per unit of risk. Baumer SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,355  in Baumer SA on April 23, 2025 and sell it today you would earn a total of  225.00  from holding Baumer SA or generate 16.61% return on investment over 90 days.

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

iShares Ibovespa Index  vs.  Baumer SA

iShares Ibovespa Index

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Ibovespa Index are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Ibovespa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Baumer SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baumer SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Baumer SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Ibovespa and Baumer SA

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

The idea behind iShares Ibovespa Index and Baumer SA 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.