Correlation Between Banco Bradesco and Deutsche Bank
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Deutsche Bank 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 Deutsche Bank 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 Deutsche Bank AG, you can compare the effects of market volatilities on Banco Bradesco and Deutsche Bank 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 Deutsche Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Deutsche Bank.
Diversification Opportunities for Banco Bradesco and Deutsche Bank
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banco and Deutsche is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Deutsche Bank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Bank AG 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 Deutsche Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Bank AG has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Deutsche Bank go up and down completely randomly.
Pair Corralation between Banco Bradesco and Deutsche Bank
Considering the 90-day investment horizon Banco Bradesco SA is expected to under-perform the Deutsche Bank. But the stock apears to be less risky and, when comparing its historical volatility, Banco Bradesco SA is 1.27 times less risky than Deutsche Bank. The stock trades about -0.35 of its potential returns per unit of risk. The Deutsche Bank AG is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 1,713 in Deutsche Bank AG on August 27, 2024 and sell it today you would lose (93.00) from holding Deutsche Bank AG or give up 5.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Bradesco SA vs. Deutsche Bank AG
Performance |
| Timeline |
| Banco Bradesco SA |
| Deutsche Bank AG |
Banco Bradesco and Deutsche Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and Deutsche Bank
The main advantage of trading using opposite Banco Bradesco and Deutsche Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Deutsche Bank 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 Deutsche Bank will offset losses from the drop in Deutsche Bank'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 |
| Deutsche Bank vs. Banco Bradesco SA | Deutsche Bank vs. Itau Unibanco Banco | Deutsche Bank vs. Lloyds Banking Group | Deutsche Bank vs. Banco Santander Brasil |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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