Correlation Between Banestes and BRB Banco

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

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

Diversification Opportunities for Banestes and BRB Banco

0.91

Correlation Coefficient

Banestes  BRB Banco

Almost no diversification

The 3 months correlation between Banestes and BRB is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Banestes SA and BRB Banco de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRB Banco de and Banestes 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 Banestes SA 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 de has no effect on the direction of Banestes i.e., Banestes and BRB Banco go up and down completely randomly.

Pair Corralation between Banestes and BRB Banco

Assuming the 90 days trading horizon Banestes SA is expected to generate 0.44 times more return on investment than BRB Banco. However, Banestes SA is 2.26 times less risky than BRB Banco. It trades about -0.16 of its potential returns per unit of risk. BRB Banco de is currently generating about -0.16 per unit of risk. If you would invest  950.00  in Banestes SA on September 3, 2024 and sell it today you would lose (85.00) from holding Banestes SA or give up 8.95% of portfolio value over 90 days.

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

Banestes SA   vs.  BRB Banco de

Banestes SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banestes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

BRB Banco de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRB Banco de 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 Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Banestes and BRB Banco

The main advantage of trading using opposite Banestes and BRB Banco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banestes 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 Banestes SA and BRB Banco de 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.