Correlation Between Banco Bradesco and Bank Mandiri
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Bank Mandiri 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 Bank Mandiri 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 Bank Mandiri Persero, you can compare the effects of market volatilities on Banco Bradesco and Bank Mandiri 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 Bank Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Bank Mandiri.
Diversification Opportunities for Banco Bradesco and Bank Mandiri
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and Bank is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Bank Mandiri Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Mandiri Persero 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 Bank Mandiri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Mandiri Persero has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Bank Mandiri go up and down completely randomly.
Pair Corralation between Banco Bradesco and Bank Mandiri
Assuming the 90 days trading horizon Banco Bradesco SA is expected to under-perform the Bank Mandiri. But the preferred stock apears to be less risky and, when comparing its historical volatility, Banco Bradesco SA is 2.69 times less risky than Bank Mandiri. The preferred stock trades about -0.17 of its potential returns per unit of risk. The Bank Mandiri Persero is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 46.00 in Bank Mandiri Persero on August 30, 2024 and sell it today you would lose (2.00) from holding Bank Mandiri Persero or give up 4.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Banco Bradesco SA vs. Bank Mandiri Persero
Performance |
| Timeline |
| Banco Bradesco SA |
| Bank Mandiri Persero |
Banco Bradesco and Bank Mandiri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and Bank Mandiri
The main advantage of trading using opposite Banco Bradesco and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Bank Mandiri 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 Bank Mandiri will offset losses from the drop in Bank Mandiri'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 |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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