Correlation Between Ford and Banco Bradesco

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

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

Diversification Opportunities for Ford and Banco Bradesco

-0.44

Correlation Coefficient

Ford  Banco Bradesco

Very good diversification

The 3 months correlation between Ford and Banco is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and Banco Bradesco go up and down completely randomly.

Pair Corralation between Ford and Banco Bradesco

Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.27 times more return on investment than Banco Bradesco. However, Ford is 1.27 times more volatile than Banco Bradesco SA. It trades about 0.01 of its potential returns per unit of risk. Banco Bradesco SA is currently generating about 0.0 per unit of risk. If you would invest  1,073  in Ford Motor on August 31, 2024 and sell it today you would earn a total of  40.00  from holding Ford Motor or generate 3.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.16%
Values	Daily Returns

Ford Motor  vs.  Banco Bradesco SA

Ford Motor

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

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 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 Ford and Banco Bradesco

The main advantage of trading using opposite Ford and Banco Bradesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.