Correlation Between BRB Banco and Cable One
Can any of the company-specific risk be diversified away by investing in both BRB Banco and Cable One 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 Cable One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRB Banco and Cable One, you can compare the effects of market volatilities on BRB Banco and Cable One 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 Cable One. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRB Banco and Cable One.
Diversification Opportunities for BRB Banco and Cable One
Excellent diversification
The 3 months correlation between BRB and Cable is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding BRB Banco and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One 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 Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of BRB Banco i.e., BRB Banco and Cable One go up and down completely randomly.
Pair Corralation between BRB Banco and Cable One
Assuming the 90 days trading horizon BRB Banco is expected to generate 1.52 times more return on investment than Cable One. However, BRB Banco is 1.52 times more volatile than Cable One. It trades about 0.0 of its potential returns per unit of risk. Cable One is currently generating about -0.03 per unit of risk. If you would invest 1,182 in BRB Banco on August 27, 2024 and sell it today you would lose (298.00) from holding BRB Banco or give up 25.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 57.75% |
| Values | Daily Returns |
BRB Banco vs. Cable One
Performance |
| Timeline |
| BRB Banco |
| Cable One |
BRB Banco and Cable One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRB Banco and Cable One
The main advantage of trading using opposite BRB Banco and Cable One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRB Banco position performs unexpectedly, Cable One 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 Cable One will offset losses from the drop in Cable One'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 |
| Cable One vs. Extra Space Storage | Cable One vs. Ross Stores | Cable One vs. Delta Air Lines | Cable One vs. Unifique Telecomunicaes SA |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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