Correlation Between Bread Financial and Vamos Locao
Can any of the company-specific risk be diversified away by investing in both Bread Financial and Vamos Locao 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 Bread Financial and Vamos Locao into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bread Financial Holdings and Vamos Locao de, you can compare the effects of market volatilities on Bread Financial and Vamos Locao 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 Bread Financial with a short position of Vamos Locao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bread Financial and Vamos Locao.
Diversification Opportunities for Bread Financial and Vamos Locao
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bread and Vamos is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bread Financial Holdings and Vamos Locao de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vamos Locao de and Bread Financial 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 Bread Financial Holdings are associated (or correlated) with Vamos Locao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vamos Locao de has no effect on the direction of Bread Financial i.e., Bread Financial and Vamos Locao go up and down completely randomly.
Pair Corralation between Bread Financial and Vamos Locao
Assuming the 90 days trading horizon Bread Financial Holdings is expected to generate 0.89 times more return on investment than Vamos Locao. However, Bread Financial Holdings is 1.12 times less risky than Vamos Locao. It trades about 0.12 of its potential returns per unit of risk. Vamos Locao de is currently generating about -0.06 per unit of risk. If you would invest 6,224 in Bread Financial Holdings on September 26, 2024 and sell it today you would earn a total of 3,396 from holding Bread Financial Holdings or generate 54.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bread Financial Holdings vs. Vamos Locao de
Performance |
Timeline |
Bread Financial Holdings |
Vamos Locao de |
Bread Financial and Vamos Locao Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bread Financial and Vamos Locao
The main advantage of trading using opposite Bread Financial and Vamos Locao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bread Financial position performs unexpectedly, Vamos Locao 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 Vamos Locao will offset losses from the drop in Vamos Locao's long position.Bread Financial vs. MAHLE Metal Leve | Bread Financial vs. American Airlines Group | Bread Financial vs. Charter Communications | Bread Financial vs. Global X Funds |
Vamos Locao vs. Localiza Rent a | Vamos Locao vs. Movida Participaes SA | Vamos Locao vs. Gerdau SA | Vamos Locao vs. Morgan Stanley |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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