Correlation Between Banco Bradesco and Farmers Bancorp
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Farmers Bancorp 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 Farmers Bancorp 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 Farmers Bancorp, you can compare the effects of market volatilities on Banco Bradesco and Farmers Bancorp 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 Farmers Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Farmers Bancorp.
Diversification Opportunities for Banco Bradesco and Farmers Bancorp
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Banco and Farmers is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Farmers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bancorp 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 Farmers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bancorp has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Farmers Bancorp go up and down completely randomly.
Pair Corralation between Banco Bradesco and Farmers Bancorp
Considering the 90-day investment horizon Banco Bradesco SA is expected to under-perform the Farmers Bancorp. In addition to that, Banco Bradesco is 1.32 times more volatile than Farmers Bancorp. It trades about -0.03 of its total potential returns per unit of risk. Farmers Bancorp is currently generating about -0.01 per unit of volatility. If you would invest 4,047 in Farmers Bancorp on September 26, 2024 and sell it today you would lose (199.00) from holding Farmers Bancorp or give up 4.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 69.13% |
| Values | Daily Returns |
Banco Bradesco SA vs. Farmers Bancorp
Performance |
| Timeline |
| Banco Bradesco SA |
| Farmers Bancorp |
Banco Bradesco and Farmers Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and Farmers Bancorp
The main advantage of trading using opposite Banco Bradesco and Farmers Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Farmers Bancorp 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 Farmers Bancorp will offset losses from the drop in Farmers Bancorp'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 |
| Farmers Bancorp vs. Banco Bradesco SA | Farmers Bancorp vs. Itau Unibanco Banco | Farmers Bancorp vs. Deutsche Bank AG | Farmers Bancorp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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