Correlation Between Banco Bradesco and Bank Hapoalim
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Bank Hapoalim 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 Bank Hapoalim 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 Bank Hapoalim ADR, you can compare the effects of market volatilities on Banco Bradesco and Bank Hapoalim 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 Bank Hapoalim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Bank Hapoalim.
Diversification Opportunities for Banco Bradesco and Bank Hapoalim
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Banco and Bank is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Bank Hapoalim ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Hapoalim ADR 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 Bank Hapoalim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Hapoalim ADR has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Bank Hapoalim go up and down completely randomly.
Pair Corralation between Banco Bradesco and Bank Hapoalim
Assuming the 90 days trading horizon Banco Bradesco SA is expected to under-perform the Bank Hapoalim. But the preferred stock apears to be less risky and, when comparing its historical volatility, Banco Bradesco SA is 1.27 times less risky than Bank Hapoalim. The preferred stock trades about -0.15 of its potential returns per unit of risk. The Bank Hapoalim ADR is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 6,835 in Bank Hapoalim ADR on December 8, 2024 and sell it today you would lose (182.00) from holding Bank Hapoalim ADR or give up 2.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Banco Bradesco SA vs. Bank Hapoalim ADR
Performance |
| Timeline |
| Banco Bradesco SA |
| Bank Hapoalim ADR |
Banco Bradesco and Bank Hapoalim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and Bank Hapoalim
The main advantage of trading using opposite Banco Bradesco and Bank Hapoalim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Bank Hapoalim 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 Bank Hapoalim will offset losses from the drop in Bank Hapoalim's long position.| Banco Bradesco vs. Ita Unibanco Holding | ||
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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