Correlation Between Swedbank and Banco Do
Can any of the company-specific risk be diversified away by investing in both Swedbank and Banco Do 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 Swedbank and Banco Do into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swedbank AB and Banco Do Brasil, you can compare the effects of market volatilities on Swedbank and Banco Do 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 Swedbank with a short position of Banco Do. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swedbank and Banco Do.
Diversification Opportunities for Swedbank and Banco Do
Poor diversification
The 3 months correlation between Swedbank and Banco is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and Banco Do Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Do Brasil and Swedbank 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 Swedbank AB are associated (or correlated) with Banco Do. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Do Brasil has no effect on the direction of Swedbank i.e., Swedbank and Banco Do go up and down completely randomly.
Pair Corralation between Swedbank and Banco Do
Assuming the 90 days horizon Swedbank AB is expected to generate 0.91 times more return on investment than Banco Do. However, Swedbank AB is 1.1 times less risky than Banco Do. It trades about -0.15 of its potential returns per unit of risk. Banco Do Brasil is currently generating about -0.17 per unit of risk. If you would invest 2,062 in Swedbank AB on August 24, 2024 and sell it today you would lose (103.00) from holding Swedbank AB or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swedbank AB vs. Banco Do Brasil
Performance |
| Timeline |
| Swedbank AB |
| Banco Do Brasil |
Swedbank and Banco Do Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swedbank and Banco Do
The main advantage of trading using opposite Swedbank and Banco Do positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swedbank position performs unexpectedly, Banco Do 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 Do will offset losses from the drop in Banco Do's long position.| Swedbank vs. Pioneer Floating Rate | Swedbank vs. The Gabelli Equity | Swedbank vs. Pioneer Municipal High | Swedbank vs. Nuveen Global High |
| Banco Do vs. BB Seguridade Participacoes | Banco Do vs. Banco Santander Brasil | Banco Do vs. Centrais Electricas Brasileiras | Banco Do vs. Itau Unibanco Banco |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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