Correlation Between Banco Bradesco and Banco Macro

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

Diversification Opportunities for Banco Bradesco and Banco Macro

-0.61

Correlation Coefficient

Banco Bradesco  Banco Macro

Excellent diversification

The 3 months correlation between Banco and Banco is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Banco Macro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Macro SA 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 Banco Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Macro SA has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Banco Macro go up and down completely randomly.

Pair Corralation between Banco Bradesco and Banco Macro

Given the investment horizon of 90 days Banco Bradesco SA is expected to generate 0.49 times more return on investment than Banco Macro. However, Banco Bradesco SA is 2.03 times less risky than Banco Macro. It trades about 0.17 of its potential returns per unit of risk. Banco Macro SA is currently generating about -0.06 per unit of risk. If you would invest  175.00  in Banco Bradesco SA on December 27, 2024 and sell it today you would earn a total of  37.00  from holding Banco Bradesco SA or generate 21.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Banco Bradesco SA  vs.  Banco Macro SA

Banco Bradesco SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Bradesco SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, Banco Bradesco displayed solid returns over the last few months and may actually be approaching a breakup point.

Banco Macro SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Banco Bradesco and Banco Macro

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

The idea behind Banco Bradesco SA and Banco Macro SA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.