Correlation Between PORTO SEGUROON and BRADESCO

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

Diversification Opportunities for PORTO SEGUROON and BRADESCO

-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between PORTO and BRADESCO is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding PORTO SEGUROON NM and BRADESCO PN EJ N1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRADESCO PN EJ and PORTO SEGUROON 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 PORTO SEGUROON NM are associated (or correlated) with BRADESCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRADESCO PN EJ has no effect on the direction of PORTO SEGUROON i.e., PORTO SEGUROON and BRADESCO go up and down completely randomly.

Pair Corralation between PORTO SEGUROON and BRADESCO

Assuming the 90 days trading horizon PORTO SEGUROON NM is expected to generate 0.6 times more return on investment than BRADESCO. However, PORTO SEGUROON NM is 1.67 times less risky than BRADESCO. It trades about 0.04 of its potential returns per unit of risk. BRADESCO PN EJ is currently generating about -0.3 per unit of risk. If you would invest  2,315  in PORTO SEGUROON NM on August 31, 2022 and sell it today you would earn a total of  38.00  from holding PORTO SEGUROON NM or generate 1.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.0%
ValuesDaily Returns

PORTO SEGUROON NM  vs.  BRADESCO PN EJ N1

 Performance (%) 
       Timeline  
PORTO SEGUROON NM 
PORTO Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in PORTO SEGUROON NM are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, PORTO SEGUROON reported solid returns over the last few months and may actually be approaching a breakup point.

PORTO Price Channel

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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

BRADESCO Price Channel

PORTO SEGUROON and BRADESCO Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PORTO SEGUROON and BRADESCO

The main advantage of trading using opposite PORTO SEGUROON and BRADESCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PORTO SEGUROON position performs unexpectedly, 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 BRADESCO will offset losses from the drop in BRADESCO's long position.
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The idea behind PORTO SEGUROON NM and BRADESCO PN EJ 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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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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