Correlation Between Banco Bradesco and Banco Do
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Banco Do 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 Banco Do 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 Banco do Brasil, you can compare the effects of market volatilities on Banco Bradesco and Banco Do 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 Banco Do. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Banco Do.
Diversification Opportunities for Banco Bradesco and Banco Do
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and Banco is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Banco do Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco do Brasil 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 Banco Do. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco do Brasil has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Banco Do go up and down completely randomly.
Pair Corralation between Banco Bradesco and Banco Do
Assuming the 90 days trading horizon Banco Bradesco SA is expected to under-perform the Banco Do. In addition to that, Banco Bradesco is 1.21 times more volatile than Banco do Brasil. It trades about -0.01 of its total potential returns per unit of risk. Banco do Brasil is currently generating about 0.04 per unit of volatility. If you would invest 2,174 in Banco do Brasil on August 28, 2024 and sell it today you would earn a total of 338.00 from holding Banco do Brasil or generate 15.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.15% |
| Values | Daily Returns |
Banco Bradesco SA vs. Banco do Brasil
Performance |
| Timeline |
| Banco Bradesco SA |
| Banco do Brasil |
Banco Bradesco and Banco Do Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and Banco Do
The main advantage of trading using opposite Banco Bradesco and Banco Do positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Banco Do 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 Banco Do will offset losses from the drop in Banco Do's long position.| Banco Bradesco vs. Banco Alfa de | Banco Bradesco vs. Banestes SA | Banco Bradesco vs. Banco da Amaznia | Banco Bradesco vs. Financeira Alfa SA |
| Banco Do vs. Banco Bradesco SA | Banco Do vs. Petrleo Brasileiro SA | Banco Do vs. Ita Unibanco Holding | Banco Do 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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