Correlation Between BRADESCO and US Bancorp

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Can any of the company-specific risk be diversified away by investing in both BRADESCO and US Bancorp 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 BRADESCO and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRADESCO PN EJ and US Bancorp, you can compare the effects of market volatilities on BRADESCO and US Bancorp 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 BRADESCO with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRADESCO and US Bancorp.

Diversification Opportunities for BRADESCO and US Bancorp

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between BRADESCO and US Bancorp is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding BRADESCO PN EJ N1 and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and 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 BRADESCO PN EJ are associated (or correlated) with US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of BRADESCO i.e., BRADESCO and US Bancorp go up and down completely randomly.

Pair Corralation between BRADESCO and US Bancorp

Assuming the 90 days trading horizon BRADESCO PN EJ is expected to generate 0.89 times more return on investment than US Bancorp. However, BRADESCO PN EJ is 1.12 times less risky than US Bancorp. It trades about 0.02 of its potential returns per unit of risk. US Bancorp is currently generating about -0.06 per unit of risk. If you would invest  1,739  in BRADESCO PN EJ on March 27, 2022 and sell it today you would earn a total of  53.00  from holding BRADESCO PN EJ or generate 3.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.41%
ValuesDaily Returns

BRADESCO PN EJ N1  vs.  US Bancorp

 Performance (%) 
      Timeline 
BRADESCO PN EJ 
BRADESCO Performance
0 of 100
Over the last 90 days BRADESCO PN EJ has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

BRADESCO Price Channel

US Bancorp 
US Bancorp Performance
0 of 100
Over the last 90 days US Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0397
Payout Ratio
0.4
Last Split Factor
3:1
Forward Annual Dividend Rate
1.84
Dividend Date
2022-07-15
Ex Dividend Date
2022-06-29
Last Split Date
1999-04-16

US Bancorp Price Channel

BRADESCO and US Bancorp Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with BRADESCO and US Bancorp

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

BRADESCO PN EJ

Pair trading matchups for BRADESCO

The idea behind BRADESCO PN EJ and US Bancorp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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