Correlation Between Banco Bradesco and Bank of the
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Bank of the 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 Bank of the 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 Bank of the, you can compare the effects of market volatilities on Banco Bradesco and Bank of the 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 Bank of the. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Bank of the.
Diversification Opportunities for Banco Bradesco and Bank of the
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and Bank is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the 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 Bank of the. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of the has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Bank of the go up and down completely randomly.
Pair Corralation between Banco Bradesco and Bank of the
Considering the 90-day investment horizon Banco Bradesco SA is expected to under-perform the Bank of the. But the stock apears to be less risky and, when comparing its historical volatility, Banco Bradesco SA is 1.54 times less risky than Bank of the. The stock trades about -0.32 of its potential returns per unit of risk. The Bank of the is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 4,272 in Bank of the on September 22, 2024 and sell it today you would lose (357.00) from holding Bank of the or give up 8.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Bradesco SA vs. Bank of the
Performance |
| Timeline |
| Banco Bradesco SA |
| Bank of the |
Banco Bradesco and Bank of the Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and Bank of the
The main advantage of trading using opposite Banco Bradesco and Bank of the positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Bank of the 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 Bank of the will offset losses from the drop in Bank of the's 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 |
| Bank of the vs. Banco Bradesco SA | Bank of the vs. Itau Unibanco Banco | Bank of the vs. Lloyds Banking Group | Bank of the 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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