Correlation Between Banco Bradesco and Community Heritage
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Community Heritage 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 Community Heritage 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 Community Heritage Financial, you can compare the effects of market volatilities on Banco Bradesco and Community Heritage 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 Community Heritage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Community Heritage.
Diversification Opportunities for Banco Bradesco and Community Heritage
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Banco and Community is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Community Heritage Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Heritage 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 Community Heritage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Heritage has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Community Heritage go up and down completely randomly.
Pair Corralation between Banco Bradesco and Community Heritage
Assuming the 90 days trading horizon Banco Bradesco SA is expected to generate 3.61 times more return on investment than Community Heritage. However, Banco Bradesco is 3.61 times more volatile than Community Heritage Financial. It trades about 0.16 of its potential returns per unit of risk. Community Heritage Financial is currently generating about 0.35 per unit of risk. If you would invest 1,142 in Banco Bradesco SA on November 5, 2024 and sell it today you would earn a total of 67.00 from holding Banco Bradesco SA or generate 5.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Banco Bradesco SA vs. Community Heritage Financial
Performance |
| Timeline |
| Banco Bradesco SA |
| Community Heritage |
Banco Bradesco and Community Heritage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and Community Heritage
The main advantage of trading using opposite Banco Bradesco and Community Heritage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Community Heritage 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 Community Heritage will offset losses from the drop in Community Heritage'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 |
| Community Heritage vs. National Capital Bank | Community Heritage vs. Citizens Financial Corp | Community Heritage vs. North Dallas Bank | Community Heritage vs. Lewis Clark 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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