Correlation Between Bancolombia and Banco Bradesco
Can any of the company-specific risk be diversified away by investing in both Bancolombia and Banco Bradesco 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 Bancolombia and Banco Bradesco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bancolombia SA ADR and Banco Bradesco SA, you can compare the effects of market volatilities on Bancolombia and Banco Bradesco 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 Bancolombia with a short position of Banco Bradesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bancolombia and Banco Bradesco.
Diversification Opportunities for Bancolombia and Banco Bradesco
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bancolombia and Banco is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bancolombia SA ADR and Banco Bradesco SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Bradesco SA and Bancolombia 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 Bancolombia SA ADR are associated (or correlated) with Banco Bradesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Bradesco SA has no effect on the direction of Bancolombia i.e., Bancolombia and Banco Bradesco go up and down completely randomly.
Pair Corralation between Bancolombia and Banco Bradesco
Considering the 90-day investment horizon Bancolombia SA ADR is expected to generate 0.64 times more return on investment than Banco Bradesco. However, Bancolombia SA ADR is 1.56 times less risky than Banco Bradesco. It trades about 0.15 of its potential returns per unit of risk. Banco Bradesco SA is currently generating about -0.08 per unit of risk. If you would invest 3,052 in Bancolombia SA ADR on October 25, 2024 and sell it today you would earn a total of 391.00 from holding Bancolombia SA ADR or generate 12.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bancolombia SA ADR vs. Banco Bradesco SA
Performance |
| Timeline |
| Bancolombia SA ADR |
| Banco Bradesco SA |
Bancolombia and Banco Bradesco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bancolombia and Banco Bradesco
The main advantage of trading using opposite Bancolombia and Banco Bradesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bancolombia position performs unexpectedly, Banco Bradesco 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 Bradesco will offset losses from the drop in Banco Bradesco's long position.| Bancolombia vs. Banco De Chile | Bancolombia vs. Banco Bradesco SA | Bancolombia vs. Banco Santander Chile | Bancolombia vs. Intercorp Financial Services |
| Banco Bradesco vs. Home Federal Bancorp | Banco Bradesco vs. LINKBANCORP | Banco Bradesco vs. Affinity Bancshares | Banco Bradesco vs. Southern California Bancorp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |