Correlation Between Sony and Banco Bradesco
Can any of the company-specific risk be diversified away by investing in both Sony 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 Sony and Banco Bradesco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Group and Banco Bradesco SA, you can compare the effects of market volatilities on Sony 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 Sony with a short position of Banco Bradesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony and Banco Bradesco.
Diversification Opportunities for Sony and Banco Bradesco
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sony and Banco is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sony 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 Sony 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 Sony 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 Sony i.e., Sony and Banco Bradesco go up and down completely randomly.
Pair Corralation between Sony and Banco Bradesco
Assuming the 90 days trading horizon Sony Group is expected to generate 26.91 times more return on investment than Banco Bradesco. However, Sony is 26.91 times more volatile than Banco Bradesco SA. It trades about 0.1 of its potential returns per unit of risk. Banco Bradesco SA is currently generating about 0.02 per unit of risk. If you would invest 8,232 in Sony Group on August 24, 2024 and sell it today you would earn a total of 2,833 from holding Sony Group or generate 34.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Sony Group vs. Banco Bradesco SA
Performance |
| Timeline |
| Sony Group |
| Banco Bradesco SA |
Sony and Banco Bradesco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony and Banco Bradesco
The main advantage of trading using opposite Sony and Banco Bradesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony 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.| Sony vs. STMicroelectronics NV | Sony vs. The Trade Desk | Sony vs. BIONTECH SE DRN | Sony vs. UnitedHealth Group Incorporated |
| Banco Bradesco vs. Ita Unibanco Holding | Banco Bradesco vs. Banco do Brasil | Banco Bradesco vs. Itasa Investimentos | Banco Bradesco vs. Petrleo Brasileiro 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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