Correlation Between Banco Do and Lifestore Financial
Can any of the company-specific risk be diversified away by investing in both Banco Do and Lifestore Financial 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 Lifestore Financial 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 Lifestore Financial Group, you can compare the effects of market volatilities on Banco Do and Lifestore Financial 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 Lifestore Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Do and Lifestore Financial.
Diversification Opportunities for Banco Do and Lifestore Financial
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Banco and Lifestore is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Banco do Brasil and Lifestore Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestore Financial 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 Lifestore Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestore Financial has no effect on the direction of Banco Do i.e., Banco Do and Lifestore Financial go up and down completely randomly.
Pair Corralation between Banco Do and Lifestore Financial
Assuming the 90 days trading horizon Banco do Brasil is expected to generate 0.66 times more return on investment than Lifestore Financial. However, Banco do Brasil is 1.51 times less risky than Lifestore Financial. It trades about 0.07 of its potential returns per unit of risk. Lifestore Financial Group is currently generating about 0.01 per unit of risk. If you would invest 1,323 in Banco do Brasil on September 5, 2024 and sell it today you would earn a total of 1,164 from holding Banco do Brasil or generate 87.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 86.0% |
| Values | Daily Returns |
Banco do Brasil vs. Lifestore Financial Group
Performance |
| Timeline |
| Banco do Brasil |
| Lifestore Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Banco Do and Lifestore Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Do and Lifestore Financial
The main advantage of trading using opposite Banco Do and Lifestore Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Do position performs unexpectedly, Lifestore Financial 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 Lifestore Financial will offset losses from the drop in Lifestore Financial's long position.| Banco Do vs. WEG SA | Banco Do vs. Engie Brasil Energia | Banco Do vs. Vale SA | Banco Do vs. Magazine Luiza SA |
| Lifestore Financial vs. NETGEAR | Lifestore Financial vs. Marfrig Global Foods | Lifestore Financial vs. Bridgford Foods | Lifestore Financial vs. Uber Technologies |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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