Current EWZ Returns Demonstrate That Optimism Is In The Air

Summary

EWZ has risen 12.5% over the past 7 business days.

P/E Ratio of 18.3X and P/S Ratio of 1.40X as of the end of September.

As Brazil goes into the first round of its election process this Sunday, investors should begin to transition from a short-term to a long-term focus.

So far I have written six articles on the price multiples for the Brazilian Index IBrX 50. In these articles, I explain that the IBrX 50 is positively correlated with Ibovespa with a correlation factor of 0.99893 and an R² of 0.99785. The raw data used to calculate the correlation and R² came from Yahoo Finance. The sample size was 47 monthly observations that occurred between 07/01/2014 until 06/01/2018. These price multiples are relevant to potential or current investors of the ETFs EWZ and BRZU. They are relevant because EWZ is almost a full replication of the Bovespa Index and BRZU is basically a three times leveraged version of EWZ. The EPS and Sales Per Share data were calculated from information available in the companies' individual quarterly filings and the prices for each company and the index came from Yahoo Finance.

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