Correlation Between Banco Bradesco and FNB
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and FNB 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 FNB 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 FNB Inc, you can compare the effects of market volatilities on Banco Bradesco and FNB 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 FNB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and FNB.
Diversification Opportunities for Banco Bradesco and FNB
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banco and FNB is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and FNB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNB Inc 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 FNB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNB Inc has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and FNB go up and down completely randomly.
Pair Corralation between Banco Bradesco and FNB
Assuming the 90 days trading horizon Banco Bradesco SA is expected to under-perform the FNB. In addition to that, Banco Bradesco is 1.68 times more volatile than FNB Inc. It trades about -0.33 of its total potential returns per unit of risk. FNB Inc is currently generating about 0.21 per unit of volatility. If you would invest 2,410 in FNB Inc on August 25, 2024 and sell it today you would earn a total of 90.00 from holding FNB Inc or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Banco Bradesco SA vs. FNB Inc
Performance |
| Timeline |
| Banco Bradesco SA |
| FNB Inc |
Banco Bradesco and FNB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and FNB
The main advantage of trading using opposite Banco Bradesco and FNB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, FNB 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 FNB will offset losses from the drop in FNB's long position.| Banco Bradesco vs. Banco Alfa de | Banco Bradesco vs. Banestes SA | Banco Bradesco vs. Banco Mercantil do | Banco Bradesco vs. Banco da Amaznia |
| FNB vs. Standard Bank Group | FNB vs. PSB Holdings | FNB vs. United Overseas Bank | FNB vs. Turkiye Garanti Bankasi |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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