Correlation Between CA Modas and BRB Banco
Can any of the company-specific risk be diversified away by investing in both CA Modas and BRB Banco 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 CA Modas and BRB Banco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CA Modas SA and BRB Banco, you can compare the effects of market volatilities on CA Modas and BRB Banco 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 CA Modas with a short position of BRB Banco. Check out your portfolio center. Please also check ongoing floating volatility patterns of CA Modas and BRB Banco.
Diversification Opportunities for CA Modas and BRB Banco
Excellent diversification
The 3 months correlation between CEAB3 and BRB is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding CA Modas SA and BRB Banco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRB Banco and CA Modas 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 CA Modas SA are associated (or correlated) with BRB Banco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRB Banco has no effect on the direction of CA Modas i.e., CA Modas and BRB Banco go up and down completely randomly.
Pair Corralation between CA Modas and BRB Banco
Assuming the 90 days trading horizon CA Modas SA is expected to generate 1.26 times more return on investment than BRB Banco. However, CA Modas is 1.26 times more volatile than BRB Banco. It trades about 0.03 of its potential returns per unit of risk. BRB Banco is currently generating about -0.05 per unit of risk. If you would invest 971.00 in CA Modas SA on September 3, 2024 and sell it today you would earn a total of 62.00 from holding CA Modas SA or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CA Modas SA vs. BRB Banco
Performance |
| Timeline |
| CA Modas SA |
| BRB Banco |
CA Modas and BRB Banco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CA Modas and BRB Banco
The main advantage of trading using opposite CA Modas and BRB Banco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CA Modas position performs unexpectedly, BRB Banco 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 BRB Banco will offset losses from the drop in BRB Banco's long position.| CA Modas vs. Pet Center Comrcio | CA Modas vs. Mitre Realty Empreendimentos | CA Modas vs. Mliuz SA | CA Modas vs. Direcional Engenharia SA |
| BRB Banco vs. BRB Banco de | BRB Banco vs. Banco do Nordeste | BRB Banco vs. Banco do Estado | BRB Banco vs. Banco Mercantil do |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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