Correlation Between Banco Bradesco and Juniper Networks

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

Diversification Opportunities for Banco Bradesco and Juniper Networks

0.37

Correlation Coefficient

Banco Bradesco  Juniper Networks

Weak diversification

The 3 months correlation between Banco and Juniper is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Juniper Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniper Networks 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 Juniper Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juniper Networks has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Juniper Networks go up and down completely randomly.

Pair Corralation between Banco Bradesco and Juniper Networks

Given the investment horizon of 90 days Banco Bradesco SA is expected to under-perform the Juniper Networks. In addition to that, Banco Bradesco is 2.28 times more volatile than Juniper Networks. It trades about -0.12 of its total potential returns per unit of risk. Juniper Networks is currently generating about -0.02 per unit of volatility. If you would invest  3,892  in Juniper Networks on October 24, 2024 and sell it today you would lose (49.00) from holding Juniper Networks or give up 1.26% of portfolio value over 90 days.

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

Banco Bradesco SA  vs.  Juniper Networks

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 conflicting performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Juniper Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Juniper Networks has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Juniper Networks is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Banco Bradesco and Juniper Networks

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

The idea behind Banco Bradesco SA and Juniper Networks 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.