Correlation Between Banco Bradesco and Colgate Palmolive
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Colgate Palmolive 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 Colgate Palmolive 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 Colgate Palmolive, you can compare the effects of market volatilities on Banco Bradesco and Colgate Palmolive 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 Colgate Palmolive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Colgate Palmolive.
Diversification Opportunities for Banco Bradesco and Colgate Palmolive
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and Colgate is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Colgate Palmolive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colgate Palmolive 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 Colgate Palmolive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colgate Palmolive has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Colgate Palmolive go up and down completely randomly.
Pair Corralation between Banco Bradesco and Colgate Palmolive
Given the investment horizon of 90 days Banco Bradesco SA is expected to generate 3.01 times more return on investment than Colgate Palmolive. However, Banco Bradesco is 3.01 times more volatile than Colgate Palmolive. It trades about -0.06 of its potential returns per unit of risk. Colgate Palmolive is currently generating about -0.35 per unit of risk. If you would invest 188.00 in Banco Bradesco SA on October 9, 2024 and sell it today you would lose (7.00) from holding Banco Bradesco SA or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Bradesco SA vs. Colgate Palmolive
Performance |
| Timeline |
| Banco Bradesco SA |
| Colgate Palmolive |
Banco Bradesco and Colgate Palmolive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and Colgate Palmolive
The main advantage of trading using opposite Banco Bradesco and Colgate Palmolive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Colgate Palmolive 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 Colgate Palmolive will offset losses from the drop in Colgate Palmolive's long position.| Banco Bradesco vs. Home Federal Bancorp | Banco Bradesco vs. LINKBANCORP | Banco Bradesco vs. Affinity Bancshares | Banco Bradesco vs. Southern California Bancorp |
| Colgate Palmolive vs. The Clorox | Colgate Palmolive vs. Procter Gamble | Colgate Palmolive vs. Unilever PLC ADR | Colgate Palmolive vs. Church Dwight |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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