Correlation Between Banco Bradesco and Petroleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Petroleo Brasileiro 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 Petroleo Brasileiro 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 Petroleo Brasileiro Petrobras, you can compare the effects of market volatilities on Banco Bradesco and Petroleo Brasileiro 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 Petroleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Petroleo Brasileiro.
Diversification Opportunities for Banco Bradesco and Petroleo Brasileiro
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Banco and Petroleo is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Petroleo Brasileiro Petrobras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petroleo Brasileiro 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 Petroleo Brasileiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petroleo Brasileiro has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Petroleo Brasileiro go up and down completely randomly.
Pair Corralation between Banco Bradesco and Petroleo Brasileiro
Given the investment horizon of 90 days Banco Bradesco SA is expected to under-perform the Petroleo Brasileiro. In addition to that, Banco Bradesco is 1.46 times more volatile than Petroleo Brasileiro Petrobras. It trades about -0.06 of its total potential returns per unit of risk. Petroleo Brasileiro Petrobras is currently generating about 0.0 per unit of volatility. If you would invest 1,317 in Petroleo Brasileiro Petrobras on October 9, 2024 and sell it today you would lose (4.00) from holding Petroleo Brasileiro Petrobras or give up 0.3% 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. Petroleo Brasileiro Petrobras
Performance |
| Timeline |
| Banco Bradesco SA |
| Petroleo Brasileiro |
Banco Bradesco and Petroleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and Petroleo Brasileiro
The main advantage of trading using opposite Banco Bradesco and Petroleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Petroleo Brasileiro 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 Petroleo Brasileiro will offset losses from the drop in Petroleo Brasileiro's long position.| Banco Bradesco vs. Home Federal Bancorp | Banco Bradesco vs. LINKBANCORP | Banco Bradesco vs. Affinity Bancshares | Banco Bradesco vs. Southern California Bancorp |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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