Correlation Between BRB Banco and Banco Pan
Can any of the company-specific risk be diversified away by investing in both BRB Banco and Banco Pan 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 BRB Banco and Banco Pan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRB Banco and Banco Pan SA, you can compare the effects of market volatilities on BRB Banco and Banco Pan 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 BRB Banco with a short position of Banco Pan. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRB Banco and Banco Pan.
Diversification Opportunities for BRB Banco and Banco Pan
Poor diversification
The 3 months correlation between BRB and Banco is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BRB Banco and Banco Pan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Pan SA and BRB Banco 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 BRB Banco are associated (or correlated) with Banco Pan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Pan SA has no effect on the direction of BRB Banco i.e., BRB Banco and Banco Pan go up and down completely randomly.
Pair Corralation between BRB Banco and Banco Pan
Assuming the 90 days trading horizon BRB Banco is expected to generate 2.64 times more return on investment than Banco Pan. However, BRB Banco is 2.64 times more volatile than Banco Pan SA. It trades about 0.0 of its potential returns per unit of risk. Banco Pan SA is currently generating about -0.01 per unit of risk. If you would invest 1,109 in BRB Banco on September 3, 2024 and sell it today you would lose (262.00) from holding BRB Banco or give up 23.62% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.2% |
Values | Daily Returns |
BRB Banco vs. Banco Pan SA
Performance |
Timeline |
BRB Banco |
Banco Pan SA |
BRB Banco and Banco Pan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BRB Banco and Banco Pan
The main advantage of trading using opposite BRB Banco and Banco Pan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRB Banco position performs unexpectedly, Banco Pan 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 Pan will offset losses from the drop in Banco Pan's long position.BRB Banco vs. BRB Banco de | BRB Banco vs. Banco do Nordeste | BRB Banco vs. Banco do Estado | BRB Banco vs. Banco Mercantil do |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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