Correlation Between Banco ABC and Banestes
Can any of the company-specific risk be diversified away by investing in both Banco ABC and Banestes 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 ABC and Banestes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco ABC Brasil and Banestes SA , you can compare the effects of market volatilities on Banco ABC and Banestes 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 ABC with a short position of Banestes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco ABC and Banestes.
Diversification Opportunities for Banco ABC and Banestes
Weak diversification
The 3 months correlation between Banco and Banestes is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Banco ABC Brasil and Banestes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banestes SA and Banco ABC 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 ABC Brasil are associated (or correlated) with Banestes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banestes SA has no effect on the direction of Banco ABC i.e., Banco ABC and Banestes go up and down completely randomly.
Pair Corralation between Banco ABC and Banestes
Assuming the 90 days trading horizon Banco ABC is expected to generate 1.11 times less return on investment than Banestes. In addition to that, Banco ABC is 1.21 times more volatile than Banestes SA . It trades about 0.03 of its total potential returns per unit of risk. Banestes SA is currently generating about 0.04 per unit of volatility. If you would invest 627.00 in Banestes SA on November 4, 2024 and sell it today you would earn a total of 224.00 from holding Banestes SA or generate 35.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco ABC Brasil vs. Banestes SA
Performance |
| Timeline |
| Banco ABC Brasil |
| Banestes SA |
Banco ABC and Banestes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco ABC and Banestes
The main advantage of trading using opposite Banco ABC and Banestes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco ABC position performs unexpectedly, Banestes 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 Banestes will offset losses from the drop in Banestes' long position.| Banco ABC vs. Banco do Estado | Banco ABC vs. MAHLE Metal Leve | Banco ABC vs. Tupy SA | Banco ABC vs. BB Seguridade Participacoes |
| Banestes vs. Banestes SA | Banestes vs. Banco Mercantil do | Banestes vs. Banco do Estado | Banestes vs. Banco da Amaznia |
Check out your portfolio center.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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |