Correlation Between Banco Bradesco and Highlands Bankshares
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Highlands Bankshares 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 Highlands Bankshares 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 Highlands Bankshares, you can compare the effects of market volatilities on Banco Bradesco and Highlands Bankshares 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 Highlands Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Highlands Bankshares.
Diversification Opportunities for Banco Bradesco and Highlands Bankshares
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Banco and Highlands is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Highlands Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlands Bankshares 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 Highlands Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlands Bankshares has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Highlands Bankshares go up and down completely randomly.
Pair Corralation between Banco Bradesco and Highlands Bankshares
Assuming the 90 days trading horizon Banco Bradesco SA is expected to under-perform the Highlands Bankshares. In addition to that, Banco Bradesco is 1.7 times more volatile than Highlands Bankshares. It trades about -0.44 of its total potential returns per unit of risk. Highlands Bankshares is currently generating about 0.36 per unit of volatility. If you would invest 3,100 in Highlands Bankshares on September 3, 2024 and sell it today you would earn a total of 173.00 from holding Highlands Bankshares or generate 5.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Banco Bradesco SA vs. Highlands Bankshares
Performance |
| Timeline |
| Banco Bradesco SA |
| Highlands Bankshares |
Banco Bradesco and Highlands Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and Highlands Bankshares
The main advantage of trading using opposite Banco Bradesco and Highlands Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Highlands Bankshares 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 Highlands Bankshares will offset losses from the drop in Highlands Bankshares' 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 |
| Highlands Bankshares vs. First Bancorp | Highlands Bankshares vs. LINKBANCORP | Highlands Bankshares vs. Bankwell Financial Group | Highlands Bankshares vs. FS 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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