Correlation Between BB Renda and BRB Banco

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

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

Diversification Opportunities for BB Renda and BRB Banco

0.65

Correlation Coefficient

BB Renda  BRB Banco

Poor diversification

The 3 months correlation between RNDP11 and BRB is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding BB Renda de and BRB Banco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRB Banco and BB Renda 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 BB Renda de are associated (or correlated) with BRB Banco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRB Banco has no effect on the direction of BB Renda i.e., BB Renda and BRB Banco go up and down completely randomly.

Pair Corralation between BB Renda and BRB Banco

Assuming the 90 days trading horizon BB Renda de is expected to under-perform the BRB Banco. But the fund apears to be less risky and, when comparing its historical volatility, BB Renda de is 1.08 times less risky than BRB Banco. The fund trades about -0.18 of its potential returns per unit of risk. The BRB Banco is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  998.00  in BRB Banco on August 30, 2024 and sell it today you would lose (197.00) from holding BRB Banco or give up 19.74% of portfolio value over 90 days.

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

BB Renda de  vs.  BRB Banco

BB Renda de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BB Renda de has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's fundamental indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the fund investors.

BRB Banco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRB Banco 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 December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BB Renda and BRB Banco

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

The idea behind BB Renda de and BRB Banco 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.