Correlation Between LINKBANCORP and Banco Bradesco

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

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

Diversification Opportunities for LINKBANCORP and Banco Bradesco

-0.33

Correlation Coefficient

LINKBANCORP  Banco Bradesco

Very good diversification

The 3 months correlation between LINKBANCORP and Banco is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding LINKBANCORP and Banco Bradesco SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Bradesco SA and LINKBANCORP 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 LINKBANCORP are associated (or correlated) with Banco Bradesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Bradesco SA has no effect on the direction of LINKBANCORP i.e., LINKBANCORP and Banco Bradesco go up and down completely randomly.

Pair Corralation between LINKBANCORP and Banco Bradesco

Given the investment horizon of 90 days LINKBANCORP is expected to under-perform the Banco Bradesco. But the stock apears to be less risky and, when comparing its historical volatility, LINKBANCORP is 1.24 times less risky than Banco Bradesco. The stock trades about 0.0 of its potential returns per unit of risk. The Banco Bradesco SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  180.00  in Banco Bradesco SA on November 28, 2024 and sell it today you would earn a total of  14.00  from holding Banco Bradesco SA or generate 7.78% return on investment over 90 days.

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

LINKBANCORP  vs.  Banco Bradesco SA

LINKBANCORP

Risk-Adjusted Performance

Very Weak

Over the last 90 days LINKBANCORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, LINKBANCORP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Banco Bradesco SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Bradesco SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, Banco Bradesco may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with LINKBANCORP and Banco Bradesco

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

The idea behind LINKBANCORP and Banco Bradesco 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.