Correlation Between Banco Bradesco and Itau Unibanco
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Itau Unibanco 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 Itau Unibanco 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 Itau Unibanco Banco, you can compare the effects of market volatilities on Banco Bradesco and Itau Unibanco 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 Itau Unibanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Itau Unibanco.
Diversification Opportunities for Banco Bradesco and Itau Unibanco
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Banco and Itau is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Itau Unibanco Banco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itau Unibanco Banco 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 Itau Unibanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itau Unibanco Banco has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Itau Unibanco go up and down completely randomly.
Pair Corralation between Banco Bradesco and Itau Unibanco
Given the investment horizon of 90 days Banco Bradesco SA is expected to generate 1.21 times more return on investment than Itau Unibanco. However, Banco Bradesco is 1.21 times more volatile than Itau Unibanco Banco. It trades about -0.18 of its potential returns per unit of risk. Itau Unibanco Banco is currently generating about -0.23 per unit of risk. If you would invest 230.00 in Banco Bradesco SA on August 27, 2024 and sell it today you would lose (16.00) from holding Banco Bradesco SA or give up 6.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Bradesco SA vs. Itau Unibanco Banco
Performance |
| Timeline |
| Banco Bradesco SA |
| Itau Unibanco Banco |
Banco Bradesco and Itau Unibanco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and Itau Unibanco
The main advantage of trading using opposite Banco Bradesco and Itau Unibanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Itau Unibanco 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 Itau Unibanco will offset losses from the drop in Itau Unibanco's long position.| Banco Bradesco vs. Home Federal Bancorp | Banco Bradesco vs. LINKBANCORP | Banco Bradesco vs. Affinity Bancshares | Banco Bradesco vs. Southern California Bancorp |
| Itau Unibanco vs. Grupo Financiero Galicia | Itau Unibanco vs. Banco Macro SA | Itau Unibanco vs. Banco Santander Brasil | Itau Unibanco vs. Lloyds Banking Group |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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