Correlation Between Raiffeisen Bank and Banco Bradesco

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

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

Diversification Opportunities for Raiffeisen Bank and Banco Bradesco

-0.26

Correlation Coefficient

Raiffeisen Bank  Banco Bradesco

Very good diversification

The 3 months correlation between Raiffeisen and Banco is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Raiffeisen Bank International 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 Raiffeisen Bank 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 Raiffeisen Bank International 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 Raiffeisen Bank i.e., Raiffeisen Bank and Banco Bradesco go up and down completely randomly.

Pair Corralation between Raiffeisen Bank and Banco Bradesco

Assuming the 90 days horizon Raiffeisen Bank International is expected to generate 1.6 times more return on investment than Banco Bradesco. However, Raiffeisen Bank is 1.6 times more volatile than Banco Bradesco SA. It trades about 0.03 of its potential returns per unit of risk. Banco Bradesco SA is currently generating about -0.19 per unit of risk. If you would invest  499.00  in Raiffeisen Bank International on September 25, 2024 and sell it today you would earn a total of  11.00  from holding Raiffeisen Bank International or generate 2.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Raiffeisen Bank International  vs.  Banco Bradesco SA

Raiffeisen Bank Inte

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Raiffeisen Bank International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Raiffeisen Bank is not utilizing all of its potentials. The newest stock price disturbance, 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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Raiffeisen Bank and Banco Bradesco

The main advantage of trading using opposite Raiffeisen Bank and Banco Bradesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raiffeisen Bank 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 Raiffeisen Bank International 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.

Check out your portfolio center.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.