Correlation Between Banco Do and Exchange Bankshares
Can any of the company-specific risk be diversified away by investing in both Banco Do and Exchange Bankshares 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 Do and Exchange Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco do Brasil and Exchange Bankshares, you can compare the effects of market volatilities on Banco Do and Exchange Bankshares 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 Do with a short position of Exchange Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Do and Exchange Bankshares.
Diversification Opportunities for Banco Do and Exchange Bankshares
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banco and Exchange is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Banco do Brasil and Exchange Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Bankshares and Banco Do 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 do Brasil are associated (or correlated) with Exchange Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Bankshares has no effect on the direction of Banco Do i.e., Banco Do and Exchange Bankshares go up and down completely randomly.
Pair Corralation between Banco Do and Exchange Bankshares
Assuming the 90 days trading horizon Banco Do is expected to generate 132.32 times less return on investment than Exchange Bankshares. But when comparing it to its historical volatility, Banco do Brasil is 1.88 times less risky than Exchange Bankshares. It trades about 0.0 of its potential returns per unit of risk. Exchange Bankshares is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4,000 in Exchange Bankshares on August 30, 2024 and sell it today you would earn a total of 447.00 from holding Exchange Bankshares or generate 11.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Banco do Brasil vs. Exchange Bankshares
Performance |
| Timeline |
| Banco do Brasil |
| Exchange Bankshares |
Banco Do and Exchange Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Do and Exchange Bankshares
The main advantage of trading using opposite Banco Do and Exchange Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Do position performs unexpectedly, Exchange Bankshares 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 Exchange Bankshares will offset losses from the drop in Exchange Bankshares' long position.| Banco Do vs. Banco Bradesco SA | Banco Do vs. Petrleo Brasileiro SA | Banco Do vs. Ita Unibanco Holding | Banco Do vs. Itasa Investimentos |
| Exchange Bankshares vs. First Community Financial | Exchange Bankshares vs. National Capital Bank | Exchange Bankshares vs. Oakworth Capital | Exchange Bankshares vs. Truxton |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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