Correlation Between Banco Bradesco and Halliburton

Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Halliburton 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 Bradesco and Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banco Bradesco DRC and Halliburton Co, you can compare the effects of market volatilities on Banco Bradesco and Halliburton 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 Bradesco with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Halliburton.

Diversification Opportunities for Banco Bradesco and Halliburton

0.43

Correlation Coefficient

Banco Bradesco  Halliburton

Very weak diversification

The 3 months correlation between Banco and Halliburton is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco DRC and Halliburton Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Banco Bradesco 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 Bradesco DRC are associated (or correlated) with Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Halliburton go up and down completely randomly.

Pair Corralation between Banco Bradesco and Halliburton

Assuming the 90 days trading horizon Banco Bradesco DRC is expected to under-perform the Halliburton. But the stock apears to be less risky and, when comparing its historical volatility, Banco Bradesco DRC is 1.06 times less risky than Halliburton. The stock trades about -0.2 of its potential returns per unit of risk. The Halliburton Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,607,492  in Halliburton Co on October 27, 2024 and sell it today you would earn a total of  27,508  from holding Halliburton Co or generate 1.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Banco Bradesco DRC  vs.  Halliburton Co

Banco Bradesco DRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Bradesco DRC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Halliburton

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Halliburton Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Halliburton is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Banco Bradesco and Halliburton

The main advantage of trading using opposite Banco Bradesco and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Halliburton 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 Halliburton will offset losses from the drop in Halliburton's long position.

The idea behind Banco Bradesco DRC and Halliburton Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.