Correlation Between Schlumberger and Banco BTG

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

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

Diversification Opportunities for Schlumberger and Banco BTG

-0.22

Correlation Coefficient

Schlumberger  Banco BTG

Very good diversification

The 3 months correlation between Schlumberger and Banco is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Schlumberger Limited and Banco BTG Pactual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco BTG Pactual and Schlumberger 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 Schlumberger Limited are associated (or correlated) with Banco BTG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco BTG Pactual has no effect on the direction of Schlumberger i.e., Schlumberger and Banco BTG go up and down completely randomly.

Pair Corralation between Schlumberger and Banco BTG

Assuming the 90 days trading horizon Schlumberger Limited is expected to under-perform the Banco BTG. In addition to that, Schlumberger is 1.0 times more volatile than Banco BTG Pactual. It trades about -0.01 of its total potential returns per unit of risk. Banco BTG Pactual is currently generating about 0.04 per unit of volatility. If you would invest  772.00  in Banco BTG Pactual on March 19, 2025 and sell it today you would earn a total of  140.00  from holding Banco BTG Pactual or generate 18.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.59%
Values	Daily Returns

Schlumberger Limited  vs.  Banco BTG Pactual

Schlumberger Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Schlumberger Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in July 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Banco BTG Pactual

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Banco BTG Pactual are ranked lower than 3 (%) 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 July 2025.

Pair Trading with Schlumberger and Banco BTG

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

The idea behind Schlumberger Limited and Banco BTG Pactual 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.