Correlation Between Fras Le and Banco Mercantil
Can any of the company-specific risk be diversified away by investing in both Fras Le and Banco Mercantil 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 Fras Le and Banco Mercantil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fras le SA and Banco Mercantil do, you can compare the effects of market volatilities on Fras Le and Banco Mercantil 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 Fras Le with a short position of Banco Mercantil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fras Le and Banco Mercantil.
Diversification Opportunities for Fras Le and Banco Mercantil
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fras and Banco is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Fras le SA and Banco Mercantil do in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Mercantil do and Fras Le 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 Fras le SA are associated (or correlated) with Banco Mercantil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Mercantil do has no effect on the direction of Fras Le i.e., Fras Le and Banco Mercantil go up and down completely randomly.
Pair Corralation between Fras Le and Banco Mercantil
Assuming the 90 days trading horizon Fras Le is expected to generate 2.3 times less return on investment than Banco Mercantil. But when comparing it to its historical volatility, Fras le SA is 1.38 times less risky than Banco Mercantil. It trades about 0.04 of its potential returns per unit of risk. Banco Mercantil do is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,600 in Banco Mercantil do on August 31, 2024 and sell it today you would earn a total of 255.00 from holding Banco Mercantil do or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fras le SA vs. Banco Mercantil do
Performance |
| Timeline |
| Fras le SA |
| Banco Mercantil do |
Fras Le and Banco Mercantil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fras Le and Banco Mercantil
The main advantage of trading using opposite Fras Le and Banco Mercantil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fras Le position performs unexpectedly, Banco Mercantil 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 Mercantil will offset losses from the drop in Banco Mercantil's long position.The idea behind Fras le SA and Banco Mercantil do pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Banco Mercantil vs. Banco Mercantil do | Banco Mercantil vs. Banco do Nordeste | Banco Mercantil vs. Banco da Amaznia | Banco Mercantil vs. Banestes SA |
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.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |