Correlation Between Banco Bradesco and Bank Rakyat
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Bank Rakyat 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 Rakyat 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 Rakyat, you can compare the effects of market volatilities on Banco Bradesco and Bank Rakyat 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 Rakyat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Bank Rakyat.
Diversification Opportunities for Banco Bradesco and Bank Rakyat
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and Bank is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Rakyat 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 Rakyat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Rakyat has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Bank Rakyat go up and down completely randomly.
Pair Corralation between Banco Bradesco and Bank Rakyat
Assuming the 90 days trading horizon Banco Bradesco SA is expected to generate 0.81 times more return on investment than Bank Rakyat. However, Banco Bradesco SA is 1.24 times less risky than Bank Rakyat. It trades about -0.34 of its potential returns per unit of risk. Bank Rakyat is currently generating about -0.29 per unit of risk. If you would invest 1,513 in Banco Bradesco SA on August 25, 2024 and sell it today you would lose (133.00) from holding Banco Bradesco SA or give up 8.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Banco Bradesco SA vs. Bank Rakyat
Performance |
| Timeline |
| Banco Bradesco SA |
| Bank Rakyat |
Banco Bradesco and Bank Rakyat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and Bank Rakyat
The main advantage of trading using opposite Banco Bradesco and Bank Rakyat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Bank Rakyat 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 Rakyat will offset losses from the drop in Bank Rakyat's long position.| Banco Bradesco vs. Ita Unibanco Holding | Banco Bradesco vs. Banco do Brasil | Banco Bradesco vs. Itasa Investimentos | Banco Bradesco vs. Petrleo Brasileiro SA |
| Bank Rakyat vs. Standard Bank Group | Bank Rakyat vs. Bank Central Asia | Bank Rakyat vs. PSB Holdings | Bank Rakyat vs. United Overseas Bank |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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