Correlation Between Banco Da and Financeira Alfa
Can any of the company-specific risk be diversified away by investing in both Banco Da and Financeira Alfa 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 Da and Financeira Alfa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco da Amaznia and Financeira Alfa SA, you can compare the effects of market volatilities on Banco Da and Financeira Alfa 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 Da with a short position of Financeira Alfa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Da and Financeira Alfa.
Diversification Opportunities for Banco Da and Financeira Alfa
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Banco and Financeira is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Banco da Amaznia and Financeira Alfa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financeira Alfa SA and Banco Da 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 da Amaznia are associated (or correlated) with Financeira Alfa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financeira Alfa SA has no effect on the direction of Banco Da i.e., Banco Da and Financeira Alfa go up and down completely randomly.
Pair Corralation between Banco Da and Financeira Alfa
Assuming the 90 days trading horizon Banco da Amaznia is expected to generate 0.94 times more return on investment than Financeira Alfa. However, Banco da Amaznia is 1.06 times less risky than Financeira Alfa. It trades about 0.08 of its potential returns per unit of risk. Financeira Alfa SA is currently generating about 0.04 per unit of risk. If you would invest 4,523 in Banco da Amaznia on August 29, 2024 and sell it today you would earn a total of 4,287 from holding Banco da Amaznia or generate 94.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Banco da Amaznia vs. Financeira Alfa SA
Performance |
| Timeline |
| Banco da Amaznia |
| Financeira Alfa SA |
Banco Da and Financeira Alfa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Da and Financeira Alfa
The main advantage of trading using opposite Banco Da and Financeira Alfa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Da position performs unexpectedly, Financeira Alfa 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 Financeira Alfa will offset losses from the drop in Financeira Alfa's long position.| Banco Da vs. Banestes SA | Banco Da vs. Banco Mercantil do | Banco Da vs. Banco do Nordeste | Banco Da vs. Banco do Estado |
| Financeira Alfa vs. Banco Alfa de | Financeira Alfa vs. Financeira Alfa SA | Financeira Alfa vs. Banco Alfa de | Financeira Alfa vs. Banestes SA |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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