Correlation Between SPDR SP and BRADESCO

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Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SPDR SP and BRADESCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and BRADESCO PN EJ, you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of BRADESCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and BRADESCO.

Diversification Opportunities for SPDR SP and BRADESCO

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between SPDR SP and BRADESCO is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 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 SPDR SP 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 SPDR SP 500 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 SPDR SP i.e., SPDR SP and BRADESCO go up and down completely randomly.

Pair Corralation between SPDR SP and BRADESCO

Given the investment horizon of 90 days SPDR SP 500 is expected to under-perform the BRADESCO. In addition to that, SPDR SP is 1.11 times more volatile than BRADESCO PN EJ. It trades about -0.26 of its total potential returns per unit of risk. BRADESCO PN EJ is currently generating about 0.11 per unit of volatility. If you would invest  1,951  in BRADESCO PN EJ on June 28, 2022 and sell it today you would earn a total of  59.00  from holding BRADESCO PN EJ or generate 3.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

SPDR SP 500  vs.  BRADESCO PN EJ N1

 Performance (%) 
       Timeline  
SPDR SP 500 
SPDR SP Performance
0 of 100
Over the last 90 days SPDR SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SPDR SP is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SPDR SP Price Channel

BRADESCO PN EJ 
BRADESCO Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BRADESCO PN EJ are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, BRADESCO may actually be approaching a critical reversion point that can send shares even higher in October 2022.

BRADESCO Price Channel

SPDR SP and BRADESCO Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPDR SP and BRADESCO

The main advantage of trading using opposite SPDR SP and BRADESCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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 SPDR SP 500 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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