Correlation Between Banco Do and Banestes
Can any of the company-specific risk be diversified away by investing in both Banco Do and Banestes 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 Do and Banestes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco do Estado and Banestes SA , you can compare the effects of market volatilities on Banco Do and Banestes 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 Do with a short position of Banestes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Do and Banestes.
Diversification Opportunities for Banco Do and Banestes
Very good diversification
The 3 months correlation between Banco and Banestes is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Banco do Estado and Banestes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banestes SA and Banco Do 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 do Estado are associated (or correlated) with Banestes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banestes SA has no effect on the direction of Banco Do i.e., Banco Do and Banestes go up and down completely randomly.
Pair Corralation between Banco Do and Banestes
Assuming the 90 days trading horizon Banco do Estado is expected to generate 3.37 times more return on investment than Banestes. However, Banco Do is 3.37 times more volatile than Banestes SA . It trades about 0.04 of its potential returns per unit of risk. Banestes SA is currently generating about -0.35 per unit of risk. If you would invest 1,681 in Banco do Estado on August 28, 2024 and sell it today you would earn a total of 19.00 from holding Banco do Estado or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco do Estado vs. Banestes SA
Performance |
| Timeline |
| Banco do Estado |
| Banestes SA |
Banco Do and Banestes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Do and Banestes
The main advantage of trading using opposite Banco Do and Banestes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Do position performs unexpectedly, Banestes 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 Banestes will offset losses from the drop in Banestes' long position.| Banco Do vs. Banco Santander SA | Banco Do vs. Itasa Investimentos | Banco Do vs. Banco do Estado | Banco Do vs. Banco da Amaznia |
| Banestes vs. Banestes SA | Banestes vs. Banco da Amaznia | Banestes vs. Banco ABC Brasil | Banestes vs. Banco do Estado |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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