Correlation Between Banco BTG and CVC Brasil

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

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

Diversification Opportunities for Banco BTG and CVC Brasil

0.43

Correlation Coefficient

Banco BTG  CVC Brasil

Very weak diversification

The 3 months correlation between Banco and CVC is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Banco BTG Pactual and CVC Brasil Operadora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVC Brasil Operadora and Banco BTG 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 Banco BTG Pactual are associated (or correlated) with CVC Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVC Brasil Operadora has no effect on the direction of Banco BTG i.e., Banco BTG and CVC Brasil go up and down completely randomly.

Pair Corralation between Banco BTG and CVC Brasil

Assuming the 90 days trading horizon Banco BTG Pactual is expected to generate 0.63 times more return on investment than CVC Brasil. However, Banco BTG Pactual is 1.59 times less risky than CVC Brasil. It trades about 0.07 of its potential returns per unit of risk. CVC Brasil Operadora is currently generating about 0.04 per unit of risk. If you would invest  825.00  in Banco BTG Pactual on April 25, 2025 and sell it today you would earn a total of  71.00  from holding Banco BTG Pactual or generate 8.61% return on investment over 90 days.

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

Banco BTG Pactual  vs.  CVC Brasil Operadora

Banco BTG Pactual

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Banco BTG Pactual are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Banco BTG may actually be approaching a critical reversion point that can send shares even higher in August 2025.

CVC Brasil Operadora

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CVC Brasil Operadora are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CVC Brasil may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Banco BTG and CVC Brasil

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

The idea behind Banco BTG Pactual and CVC Brasil Operadora 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.