Correlation Between Banco Do and Solera National
Can any of the company-specific risk be diversified away by investing in both Banco Do and Solera National 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 Banco Do and Solera National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco do Brasil and Solera National Bancorp, you can compare the effects of market volatilities on Banco Do and Solera National 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 Banco Do with a short position of Solera National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Do and Solera National.
Diversification Opportunities for Banco Do and Solera National
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Banco and Solera is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Banco do Brasil and Solera National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solera National Bancorp and Banco Do 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 Banco do Brasil are associated (or correlated) with Solera National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solera National Bancorp has no effect on the direction of Banco Do i.e., Banco Do and Solera National go up and down completely randomly.
Pair Corralation between Banco Do and Solera National
Assuming the 90 days trading horizon Banco do Brasil is expected to generate 0.7 times more return on investment than Solera National. However, Banco do Brasil is 1.42 times less risky than Solera National. It trades about 0.09 of its potential returns per unit of risk. Solera National Bancorp is currently generating about 0.03 per unit of risk. If you would invest 2,530 in Banco do Brasil on December 5, 2024 and sell it today you would earn a total of 201.00 from holding Banco do Brasil or generate 7.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Banco do Brasil vs. Solera National Bancorp
Performance |
Timeline |
Banco do Brasil |
Solera National Bancorp |
Banco Do and Solera National Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Banco Do and Solera National
The main advantage of trading using opposite Banco Do and Solera National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Do position performs unexpectedly, Solera National 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 Solera National will offset losses from the drop in Solera National's long position.Banco Do vs. Banco Bradesco SA | Banco Do vs. Petrleo Brasileiro SA | Banco Do vs. Ita Unibanco Holding | Banco Do vs. Itasa Investimentos |
Solera National vs. Pioneer Bankcorp | Solera National vs. Liberty Northwest Bancorp | Solera National vs. First Community | Solera National vs. Coeur dAlene Bancorp |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |