Correlation Between Banco Bradesco and B3 SA
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and B3 SA 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 B3 SA 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 B3 SA , you can compare the effects of market volatilities on Banco Bradesco and B3 SA 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 B3 SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and B3 SA.
Diversification Opportunities for Banco Bradesco and B3 SA
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and B3SA3 is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and B3 SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B3 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 B3 SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B3 SA has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and B3 SA go up and down completely randomly.
Pair Corralation between Banco Bradesco and B3 SA
Assuming the 90 days trading horizon Banco Bradesco SA is expected to generate 0.88 times more return on investment than B3 SA. However, Banco Bradesco SA is 1.14 times less risky than B3 SA. It trades about 0.01 of its potential returns per unit of risk. B3 SA is currently generating about -0.01 per unit of risk. If you would invest 1,243 in Banco Bradesco SA on September 2, 2024 and sell it today you would earn a total of 20.00 from holding Banco Bradesco SA or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Bradesco SA vs. B3 SA
Performance |
| Timeline |
| Banco Bradesco SA |
| B3 SA |
Banco Bradesco and B3 SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and B3 SA
The main advantage of trading using opposite Banco Bradesco and B3 SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, B3 SA 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 B3 SA will offset losses from the drop in B3 SA's long position.| Banco Bradesco vs. Banco do Brasil | Banco Bradesco vs. Petrleo Brasileiro SA | Banco Bradesco vs. BB Seguridade Participacoes |
| B3 SA vs. Banco Bradesco SA | B3 SA vs. Petrleo Brasileiro SA | B3 SA vs. Ita Unibanco Holding | B3 SA vs. Itasa Investimentos |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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