Correlation Between Banco Bradesco and CMUV Bancorp

Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and CMUV Bancorp 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 CMUV Bancorp 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 CMUV Bancorp, you can compare the effects of market volatilities on Banco Bradesco and CMUV Bancorp 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 CMUV Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and CMUV Bancorp.

Diversification Opportunities for Banco Bradesco and CMUV Bancorp

0.11

Correlation Coefficient

Banco Bradesco  CMUV Bancorp

Average diversification

The 3 months correlation between Banco and CMUV is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and CMUV Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMUV Bancorp 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 CMUV Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMUV Bancorp has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and CMUV Bancorp go up and down completely randomly.

Pair Corralation between Banco Bradesco and CMUV Bancorp

Assuming the 90 days trading horizon Banco Bradesco SA is expected to under-perform the CMUV Bancorp. But the preferred stock apears to be less risky and, when comparing its historical volatility, Banco Bradesco SA is 1.05 times less risky than CMUV Bancorp. The preferred stock trades about -0.27 of its potential returns per unit of risk. The CMUV Bancorp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,950  in CMUV Bancorp on October 27, 2024 and sell it today you would earn a total of  300.00  from holding CMUV Bancorp or generate 15.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Banco Bradesco SA  vs.  CMUV Bancorp

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CMUV Bancorp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CMUV Bancorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, CMUV Bancorp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banco Bradesco and CMUV Bancorp

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

The idea behind Banco Bradesco SA and CMUV Bancorp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.