Correlation Between BB Seguridade and Banco Mercantil
Can any of the company-specific risk be diversified away by investing in both BB Seguridade and Banco Mercantil 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 BB Seguridade and Banco Mercantil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BB Seguridade Participacoes and Banco Mercantil do, you can compare the effects of market volatilities on BB Seguridade and Banco Mercantil 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 BB Seguridade with a short position of Banco Mercantil. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Seguridade and Banco Mercantil.
Diversification Opportunities for BB Seguridade and Banco Mercantil
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between BBSE3 and Banco is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding BB Seguridade Participacoes and Banco Mercantil do in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Mercantil do and BB Seguridade 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 BB Seguridade Participacoes are associated (or correlated) with Banco Mercantil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Mercantil do has no effect on the direction of BB Seguridade i.e., BB Seguridade and Banco Mercantil go up and down completely randomly.
Pair Corralation between BB Seguridade and Banco Mercantil
Assuming the 90 days trading horizon BB Seguridade is expected to generate 5.95 times less return on investment than Banco Mercantil. But when comparing it to its historical volatility, BB Seguridade Participacoes is 2.21 times less risky than Banco Mercantil. It trades about 0.05 of its potential returns per unit of risk. Banco Mercantil do is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 850.00 in Banco Mercantil do on November 27, 2024 and sell it today you would earn a total of 2,969 from holding Banco Mercantil do or generate 349.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BB Seguridade Participacoes vs. Banco Mercantil do
Performance |
| Timeline |
| BB Seguridade Partic |
| Banco Mercantil do |
BB Seguridade and Banco Mercantil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BB Seguridade and Banco Mercantil
The main advantage of trading using opposite BB Seguridade and Banco Mercantil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Seguridade position performs unexpectedly, Banco Mercantil 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 Banco Mercantil will offset losses from the drop in Banco Mercantil's long position.| BB Seguridade vs. Transmissora Aliana de | BB Seguridade vs. Banco do Brasil | BB Seguridade vs. Itasa Investimentos | BB Seguridade vs. Engie Brasil Energia |
| Banco Mercantil vs. Banco Mercantil do | Banco Mercantil vs. Banestes SA | Banco Mercantil vs. Banco da Amaznia | Banco Mercantil vs. Banco Alfa de |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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