Correlation Between Banco Bradesco and BankFirst Capital
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and BankFirst Capital 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 BankFirst Capital 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 BankFirst Capital, you can compare the effects of market volatilities on Banco Bradesco and BankFirst Capital 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 BankFirst Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and BankFirst Capital.
Diversification Opportunities for Banco Bradesco and BankFirst Capital
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Banco and BankFirst is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and BankFirst Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankFirst Capital 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 BankFirst Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankFirst Capital has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and BankFirst Capital go up and down completely randomly.
Pair Corralation between Banco Bradesco and BankFirst Capital
Assuming the 90 days trading horizon Banco Bradesco SA is expected to under-perform the BankFirst Capital. But the preferred stock apears to be less risky and, when comparing its historical volatility, Banco Bradesco SA is 1.41 times less risky than BankFirst Capital. The preferred stock trades about -0.44 of its potential returns per unit of risk. The BankFirst Capital is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,899 in BankFirst Capital on August 28, 2024 and sell it today you would earn a total of 300.00 from holding BankFirst Capital or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Banco Bradesco SA vs. BankFirst Capital
Performance |
| Timeline |
| Banco Bradesco SA |
| BankFirst Capital |
Banco Bradesco and BankFirst Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and BankFirst Capital
The main advantage of trading using opposite Banco Bradesco and BankFirst Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, BankFirst Capital 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 BankFirst Capital will offset losses from the drop in BankFirst Capital'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 |
| BankFirst Capital vs. Harbor Bankshares | BankFirst Capital vs. Citizens Bancshares Corp | BankFirst Capital vs. Security Federal | BankFirst Capital vs. MF Bancorp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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