Correlation Between Banco Bradesco and HCB Financial
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and HCB Financial 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 HCB Financial 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 HCB Financial Corp, you can compare the effects of market volatilities on Banco Bradesco and HCB Financial 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 HCB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and HCB Financial.
Diversification Opportunities for Banco Bradesco and HCB Financial
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Banco and HCB is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and HCB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCB Financial Corp 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 HCB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCB Financial Corp has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and HCB Financial go up and down completely randomly.
Pair Corralation between Banco Bradesco and HCB Financial
Assuming the 90 days trading horizon Banco Bradesco SA is expected to under-perform the HCB Financial. But the preferred stock apears to be less risky and, when comparing its historical volatility, Banco Bradesco SA is 1.7 times less risky than HCB Financial. The preferred stock trades about -0.03 of its potential returns per unit of risk. The HCB Financial Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,199 in HCB Financial Corp on September 4, 2024 and sell it today you would earn a total of 801.00 from holding HCB Financial Corp or generate 36.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 60.32% |
| Values | Daily Returns |
Banco Bradesco SA vs. HCB Financial Corp
Performance |
| Timeline |
| Banco Bradesco SA |
| HCB Financial Corp |
Banco Bradesco and HCB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and HCB Financial
The main advantage of trading using opposite Banco Bradesco and HCB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, HCB Financial 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 HCB Financial will offset losses from the drop in HCB Financial's long position.| Banco Bradesco vs. Banco do Estado | Banco Bradesco vs. MAHLE Metal Leve | Banco Bradesco vs. Tupy SA | Banco Bradesco vs. BB Seguridade Participacoes |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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