Correlation Between Financial Institutions and Banco Bradesco
Can any of the company-specific risk be diversified away by investing in both Financial Institutions 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 Financial Institutions and Banco Bradesco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Institutions and Banco Bradesco SA, you can compare the effects of market volatilities on Financial Institutions 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 Financial Institutions with a short position of Banco Bradesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Institutions and Banco Bradesco.
Diversification Opportunities for Financial Institutions and Banco Bradesco
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Financial and Banco is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Financial Institutions 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 Financial Institutions 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 Financial Institutions 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 Financial Institutions i.e., Financial Institutions and Banco Bradesco go up and down completely randomly.
Pair Corralation between Financial Institutions and Banco Bradesco
Given the investment horizon of 90 days Financial Institutions is expected to generate 1.52 times less return on investment than Banco Bradesco. But when comparing it to its historical volatility, Financial Institutions is 1.72 times less risky than Banco Bradesco. It trades about 0.24 of its potential returns per unit of risk. Banco Bradesco SA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 196.00 in Banco Bradesco SA on November 18, 2024 and sell it today you would earn a total of 21.00 from holding Banco Bradesco SA or generate 10.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Institutions vs. Banco Bradesco SA
Performance |
| Timeline |
| Financial Institutions |
| Banco Bradesco SA |
Financial Institutions and Banco Bradesco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Institutions and Banco Bradesco
The main advantage of trading using opposite Financial Institutions and Banco Bradesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Institutions 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.| Financial Institutions vs. First Community | Financial Institutions vs. Community West Bancshares | Financial Institutions vs. First Financial Northwest | Financial Institutions vs. First Northwest Bancorp |
| Banco Bradesco vs. Banco Santander Brasil | Banco Bradesco vs. Banco Macro SA | Banco Bradesco vs. Lloyds Banking Group | Banco Bradesco vs. Grupo Financiero Galicia |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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