Correlation Between Banco Bradesco and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and BNP Paribas 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 Bradesco and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Bradesco SA and BNP Paribas SA, you can compare the effects of market volatilities on Banco Bradesco and BNP Paribas 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 Bradesco with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and BNP Paribas.
Diversification Opportunities for Banco Bradesco and BNP Paribas
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Banco and BNP is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and BNP Paribas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas SA and Banco Bradesco 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 Bradesco SA are associated (or correlated) with BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas SA has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and BNP Paribas go up and down completely randomly.
Pair Corralation between Banco Bradesco and BNP Paribas
Considering the 90-day investment horizon Banco Bradesco SA is expected to under-perform the BNP Paribas. In addition to that, Banco Bradesco is 1.35 times more volatile than BNP Paribas SA. It trades about -0.32 of its total potential returns per unit of risk. BNP Paribas SA is currently generating about -0.01 per unit of volatility. If you would invest 6,075 in BNP Paribas SA on September 22, 2024 and sell it today you would lose (57.00) from holding BNP Paribas SA or give up 0.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Bradesco SA vs. BNP Paribas SA
Performance |
| Timeline |
| Banco Bradesco SA |
| BNP Paribas SA |
Banco Bradesco and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and BNP Paribas
The main advantage of trading using opposite Banco Bradesco and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, BNP Paribas 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 BNP Paribas will offset losses from the drop in BNP Paribas' long position.| Banco Bradesco vs. Banco Santander Brasil | Banco Bradesco vs. Banco Macro SA | Banco Bradesco vs. Lloyds Banking Group | Banco Bradesco vs. Grupo Financiero Galicia |
| BNP Paribas vs. Banco Bradesco SA | BNP Paribas vs. Itau Unibanco Banco | BNP Paribas vs. Lloyds Banking Group | BNP Paribas vs. Deutsche Bank AG |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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