Correlation Between Banco Bradesco and Metropolitan Bank
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Metropolitan Bank 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 Metropolitan Bank 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 Metropolitan Bank and, you can compare the effects of market volatilities on Banco Bradesco and Metropolitan Bank 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 Metropolitan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Metropolitan Bank.
Diversification Opportunities for Banco Bradesco and Metropolitan Bank
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Banco and Metropolitan is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Metropolitan Bank and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Bank 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 Metropolitan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Bank has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Metropolitan Bank go up and down completely randomly.
Pair Corralation between Banco Bradesco and Metropolitan Bank
Assuming the 90 days trading horizon Banco Bradesco SA is expected to under-perform the Metropolitan Bank. But the preferred stock apears to be less risky and, when comparing its historical volatility, Banco Bradesco SA is 2.14 times less risky than Metropolitan Bank. The preferred stock trades about -0.17 of its potential returns per unit of risk. The Metropolitan Bank and is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,200 in Metropolitan Bank and on August 30, 2024 and sell it today you would earn a total of 574.00 from holding Metropolitan Bank and or generate 26.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Banco Bradesco SA vs. Metropolitan Bank and
Performance |
| Timeline |
| Banco Bradesco SA |
| Metropolitan Bank |
Banco Bradesco and Metropolitan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and Metropolitan Bank
The main advantage of trading using opposite Banco Bradesco and Metropolitan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Metropolitan Bank 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 Metropolitan Bank will offset losses from the drop in Metropolitan Bank's long position.| Banco Bradesco vs. BB Seguridade Participacoes | Banco Bradesco vs. Banco ABC Brasil | Banco Bradesco vs. Companhia de Saneamento | Banco Bradesco vs. CTEEP Companhia |
| Metropolitan Bank vs. ServiceNow | Metropolitan Bank vs. Visteon Corp | Metropolitan Bank vs. PACCAR Inc | Metropolitan Bank vs. Where Food Comes |
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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