Correlation Between Freedom Bank and Atacado SA
Can any of the company-specific risk be diversified away by investing in both Freedom Bank and Atacado SA 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 Freedom Bank and Atacado SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Bank of and Atacado SA, you can compare the effects of market volatilities on Freedom Bank and Atacado SA 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 Freedom Bank with a short position of Atacado SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and Atacado SA.
Diversification Opportunities for Freedom Bank and Atacado SA
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Freedom and Atacado is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Atacado SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atacado SA and Freedom Bank 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 Freedom Bank of are associated (or correlated) with Atacado SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atacado SA has no effect on the direction of Freedom Bank i.e., Freedom Bank and Atacado SA go up and down completely randomly.
Pair Corralation between Freedom Bank and Atacado SA
Given the investment horizon of 90 days Freedom Bank of is expected to under-perform the Atacado SA. In addition to that, Freedom Bank is 25.89 times more volatile than Atacado SA. It trades about -0.05 of its total potential returns per unit of risk. Atacado SA is currently generating about 0.12 per unit of volatility. If you would invest 1,443 in Atacado SA on September 12, 2024 and sell it today you would earn a total of 11.00 from holding Atacado SA or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 33.58% |
| Values | Daily Returns |
Freedom Bank of vs. Atacado SA
Performance |
| Timeline |
| Freedom Bank |
| Atacado SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Freedom Bank and Atacado SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Bank and Atacado SA
The main advantage of trading using opposite Freedom Bank and Atacado SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank position performs unexpectedly, Atacado SA 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 Atacado SA will offset losses from the drop in Atacado SA's long position.| Freedom Bank vs. HUMANA INC | Freedom Bank vs. Barloworld Ltd ADR | Freedom Bank vs. Morningstar Unconstrained Allocation | Freedom Bank vs. Thrivent High Yield |
| Atacado SA vs. Freedom Bank of | Atacado SA vs. Zhihu Inc ADR | Atacado SA vs. Discover Financial Services | Atacado SA vs. CDW Corp |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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