Correlation Between MNB Holdings and Banco Bradesco

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

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

Diversification Opportunities for MNB Holdings and Banco Bradesco

-0.61

Correlation Coefficient

MNB Holdings  Banco Bradesco

Excellent diversification

The 3 months correlation between MNB and Banco is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding MNB Holdings Corp 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 MNB Holdings 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 MNB Holdings Corp 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 MNB Holdings i.e., MNB Holdings and Banco Bradesco go up and down completely randomly.

Pair Corralation between MNB Holdings and Banco Bradesco

Given the investment horizon of 90 days MNB Holdings Corp is expected to under-perform the Banco Bradesco. But the otc stock apears to be less risky and, when comparing its historical volatility, MNB Holdings Corp is 1.0 times less risky than Banco Bradesco. The otc stock trades about -0.02 of its potential returns per unit of risk. The Banco Bradesco SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  238.00  in Banco Bradesco SA on October 15, 2024 and sell it today you would lose (50.00) from holding Banco Bradesco SA or give up 21.01% of portfolio value over 90 days.

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

MNB Holdings Corp  vs.  Banco Bradesco SA

MNB Holdings Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MNB Holdings Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, MNB Holdings is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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 weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with MNB Holdings and Banco Bradesco

The main advantage of trading using opposite MNB Holdings and Banco Bradesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MNB Holdings 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 MNB Holdings Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.