Correlation Between BB Seguridade and Fleury SA
Can any of the company-specific risk be diversified away by investing in both BB Seguridade and Fleury SA 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 Fleury SA 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 Fleury SA, you can compare the effects of market volatilities on BB Seguridade and Fleury SA 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 Fleury SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Seguridade and Fleury SA.
Diversification Opportunities for BB Seguridade and Fleury SA
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BBSE3 and Fleury is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding BB Seguridade Participacoes and Fleury SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fleury SA 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 Fleury SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fleury SA has no effect on the direction of BB Seguridade i.e., BB Seguridade and Fleury SA go up and down completely randomly.
Pair Corralation between BB Seguridade and Fleury SA
Assuming the 90 days trading horizon BB Seguridade Participacoes is expected to generate 0.83 times more return on investment than Fleury SA. However, BB Seguridade Participacoes is 1.21 times less risky than Fleury SA. It trades about 0.05 of its potential returns per unit of risk. Fleury SA is currently generating about -0.01 per unit of risk. If you would invest 2,742 in BB Seguridade Participacoes on August 31, 2024 and sell it today you would earn a total of 611.00 from holding BB Seguridade Participacoes or generate 22.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.94% |
| Values | Daily Returns |
BB Seguridade Participacoes vs. Fleury SA
Performance |
| Timeline |
| BB Seguridade Partic |
| Fleury SA |
BB Seguridade and Fleury SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BB Seguridade and Fleury SA
The main advantage of trading using opposite BB Seguridade and Fleury SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Seguridade position performs unexpectedly, Fleury SA 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 Fleury SA will offset losses from the drop in Fleury SA's long position.| BB Seguridade vs. Banco Bradesco SA | BB Seguridade vs. Petrleo Brasileiro SA | BB Seguridade vs. Ita Unibanco Holding | BB Seguridade vs. Itasa Investimentos |
| Fleury SA vs. Engie Brasil Energia | Fleury SA vs. WEG SA | Fleury SA vs. Ambev SA | Fleury SA vs. M Dias Branco |
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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