Correlation Between First Community and Banco Bradesco
Can any of the company-specific risk be diversified away by investing in both First Community 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 First Community and Banco Bradesco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Community and Banco Bradesco SA, you can compare the effects of market volatilities on First Community 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 First Community with a short position of Banco Bradesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and Banco Bradesco.
Diversification Opportunities for First Community and Banco Bradesco
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Banco is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding First Community 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 First Community 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 First Community 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 First Community i.e., First Community and Banco Bradesco go up and down completely randomly.
Pair Corralation between First Community and Banco Bradesco
Given the investment horizon of 90 days First Community is expected to generate 0.62 times more return on investment than Banco Bradesco. However, First Community is 1.62 times less risky than Banco Bradesco. It trades about 0.4 of its potential returns per unit of risk. Banco Bradesco SA is currently generating about -0.26 per unit of risk. If you would invest 2,342 in First Community on September 4, 2024 and sell it today you would earn a total of 273.00 from holding First Community or generate 11.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Community vs. Banco Bradesco SA
Performance |
| Timeline |
| First Community |
| Banco Bradesco SA |
First Community and Banco Bradesco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Community and Banco Bradesco
The main advantage of trading using opposite First Community and Banco Bradesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community 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.| First Community vs. Community West Bancshares | First Community vs. First Financial Northwest | First Community vs. First Northwest Bancorp | First Community vs. Home Federal Bancorp |
| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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