Correlation Between Companhia Brasileira and IShares US

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Can any of the company-specific risk be diversified away by investing in both Companhia Brasileira and IShares US 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 Companhia Brasileira and IShares US into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Brasileira De and IShares US Technology, you can compare the effects of market volatilities on Companhia Brasileira and IShares US 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 Companhia Brasileira with a short position of IShares US. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Brasileira and IShares US.

Diversification Opportunities for Companhia Brasileira and IShares US

-0.68
  Correlation Coefficient

Excellent diversification

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

Pair Corralation between Companhia Brasileira and IShares US

Considering the 90-day investment horizon Companhia Brasileira De is expected to under-perform the IShares US. In addition to that, Companhia Brasileira is 3.48 times more volatile than IShares US Technology. It trades about -0.18 of its total potential returns per unit of risk. IShares US Technology is currently generating about 0.09 per unit of volatility. If you would invest  13,261  in IShares US Technology on December 29, 2023 and sell it today you would earn a total of  273.00  from holding IShares US Technology or generate 2.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Companhia Brasileira De  vs.  IShares US Technology

 Performance 
       Timeline  
Companhia Brasileira 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Companhia Brasileira De has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of sluggish performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
IShares US Technology 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in IShares US Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, IShares US may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Companhia Brasileira and IShares US Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Companhia Brasileira and IShares US

The main advantage of trading using opposite Companhia Brasileira and IShares US positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Brasileira position performs unexpectedly, IShares US 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 IShares US will offset losses from the drop in IShares US's long position.
The idea behind Companhia Brasileira De and IShares US Technology 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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