Correlation Between Banco Bradesco and Itasa Investimentos
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Itasa Investimentos 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 Itasa Investimentos 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 Itasa Investimentos, you can compare the effects of market volatilities on Banco Bradesco and Itasa Investimentos 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 Itasa Investimentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Itasa Investimentos.
Diversification Opportunities for Banco Bradesco and Itasa Investimentos
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Banco and Itasa is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Itasa Investimentos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itasa Investimentos 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 Itasa Investimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itasa Investimentos has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Itasa Investimentos go up and down completely randomly.
Pair Corralation between Banco Bradesco and Itasa Investimentos
Assuming the 90 days trading horizon Banco Bradesco SA is expected to under-perform the Itasa Investimentos. But the preferred stock apears to be less risky and, when comparing its historical volatility, Banco Bradesco SA is 1.02 times less risky than Itasa Investimentos. The preferred stock trades about -0.39 of its potential returns per unit of risk. The Itasa Investimentos is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest 1,077 in Itasa Investimentos on August 27, 2024 and sell it today you would lose (50.00) from holding Itasa Investimentos or give up 4.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Bradesco SA vs. Itasa Investimentos
Performance |
| Timeline |
| Banco Bradesco SA |
| Itasa Investimentos |
Banco Bradesco and Itasa Investimentos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and Itasa Investimentos
The main advantage of trading using opposite Banco Bradesco and Itasa Investimentos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Itasa Investimentos 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 Itasa Investimentos will offset losses from the drop in Itasa Investimentos' long position.| Banco Bradesco vs. Banco Alfa de | Banco Bradesco vs. Banestes SA | Banco Bradesco vs. Banco da Amaznia | Banco Bradesco vs. Financeira Alfa SA |
| Itasa Investimentos vs. Banco Alfa de | Itasa Investimentos vs. Banestes SA | Itasa Investimentos vs. Banco da Amaznia | Itasa Investimentos vs. Financeira Alfa SA |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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