Correlation Between Banco Bradesco and Bank of San

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

By analyzing existing cross correlation between Banco Bradesco SA and Bank of San, you can compare the effects of market volatilities on Banco Bradesco and Bank of San 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 Bank of San. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Bank of San.

Diversification Opportunities for Banco Bradesco and Bank of San

-0.66

Correlation Coefficient

Banco Bradesco  Bank of San

Excellent diversification

The 3 months correlation between Banco and Bank is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Bank of San in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of San 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 SA are associated (or correlated) with Bank of San. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of San has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Bank of San go up and down completely randomly.

Pair Corralation between Banco Bradesco and Bank of San

Assuming the 90 days trading horizon Banco Bradesco SA is expected to under-perform the Bank of San. In addition to that, Banco Bradesco is 2.57 times more volatile than Bank of San. It trades about -0.23 of its total potential returns per unit of risk. Bank of San is currently generating about 0.07 per unit of volatility. If you would invest  2,950  in Bank of San on September 3, 2024 and sell it today you would earn a total of  65.00  from holding Bank of San or generate 2.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Banco Bradesco SA  vs.  Bank of San

Banco Bradesco SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Bradesco SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bank of San

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of San are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Bank of San is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Banco Bradesco and Bank of San

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

The idea behind Banco Bradesco SA and Bank of San 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.