Correlation Between Lloyds Banking and Banco Bradesco
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking 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 Lloyds Banking and Banco Bradesco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lloyds Banking Group and Banco Bradesco SA, you can compare the effects of market volatilities on Lloyds Banking 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 Lloyds Banking with a short position of Banco Bradesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Banco Bradesco.
Diversification Opportunities for Lloyds Banking and Banco Bradesco
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lloyds and Banco is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group 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 Lloyds Banking 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 Lloyds Banking Group 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 Lloyds Banking i.e., Lloyds Banking and Banco Bradesco go up and down completely randomly.
Pair Corralation between Lloyds Banking and Banco Bradesco
Considering the 90-day investment horizon Lloyds Banking Group is expected to under-perform the Banco Bradesco. In addition to that, Lloyds Banking is 1.57 times more volatile than Banco Bradesco SA. It trades about -0.23 of its total potential returns per unit of risk. Banco Bradesco SA is currently generating about -0.26 per unit of volatility. If you would invest 262.00 in Banco Bradesco SA on August 24, 2024 and sell it today you would lose (23.00) from holding Banco Bradesco SA or give up 8.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. Banco Bradesco SA
Performance |
| Timeline |
| Lloyds Banking Group |
| Banco Bradesco SA |
Lloyds Banking and Banco Bradesco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Banco Bradesco
The main advantage of trading using opposite Lloyds Banking and Banco Bradesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking 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.| Lloyds Banking vs. Itau Unibanco Banco | Lloyds Banking vs. Grupo Financiero Galicia | Lloyds Banking vs. Banco Macro SA | Lloyds Banking vs. Banco Santander Brasil |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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