Correlation Between BBVA Banco and Banco Bradesco
Can any of the company-specific risk be diversified away by investing in both BBVA Banco and Banco Bradesco 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 BBVA Banco and Banco Bradesco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBVA Banco Frances and Banco Bradesco SA, you can compare the effects of market volatilities on BBVA Banco and Banco Bradesco 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 BBVA Banco with a short position of Banco Bradesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and Banco Bradesco.
Diversification Opportunities for BBVA Banco and Banco Bradesco
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BBVA and Banco is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and Banco Bradesco SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Bradesco SA and BBVA Banco 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 BBVA Banco Frances are associated (or correlated) with Banco Bradesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Bradesco SA has no effect on the direction of BBVA Banco i.e., BBVA Banco and Banco Bradesco go up and down completely randomly.
Pair Corralation between BBVA Banco and Banco Bradesco
Given the investment horizon of 90 days BBVA Banco Frances is expected to generate 1.88 times more return on investment than Banco Bradesco. However, BBVA Banco is 1.88 times more volatile than Banco Bradesco SA. It trades about 0.16 of its potential returns per unit of risk. Banco Bradesco SA is currently generating about -0.04 per unit of risk. If you would invest 448.00 in BBVA Banco Frances on August 24, 2024 and sell it today you would earn a total of 1,192 from holding BBVA Banco Frances or generate 266.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBVA Banco Frances vs. Banco Bradesco SA
Performance |
| Timeline |
| BBVA Banco Frances |
| Banco Bradesco SA |
BBVA Banco and Banco Bradesco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and Banco Bradesco
The main advantage of trading using opposite BBVA Banco and Banco Bradesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco position performs unexpectedly, Banco Bradesco 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 Bradesco will offset losses from the drop in Banco Bradesco's long position.| BBVA Banco vs. Banco Macro SA | BBVA Banco vs. Grupo Financiero Galicia | BBVA Banco vs. Banco Bradesco SA | BBVA Banco vs. Itau Unibanco Banco |
| Banco Bradesco vs. Banco Santander Brasil | Banco Bradesco vs. Banco Macro SA | Banco Bradesco vs. Lloyds Banking Group | Banco Bradesco vs. Grupo Financiero Galicia |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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