Correlation Between Banco Bradesco and National Bank

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

Diversification Opportunities for Banco Bradesco and National Bank

0.37

Correlation Coefficient

Banco Bradesco  National Bank

Weak diversification

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

Pair Corralation between Banco Bradesco and National Bank

Considering the 90-day investment horizon Banco Bradesco is expected to generate 101.19 times less return on investment than National Bank. But when comparing it to its historical volatility, Banco Bradesco SA is 1.82 times less risky than National Bank. It trades about 0.0 of its potential returns per unit of risk. National Bank of is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  302.00  in National Bank of on September 23, 2024 and sell it today you would earn a total of  518.00  from holding National Bank of or generate 171.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Banco Bradesco SA  vs.  National Bank of

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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

National Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, National Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Banco Bradesco and National Bank

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

The idea behind Banco Bradesco SA and National Bank of 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .