Correlation Between Banco Bradesco and Banco Macro

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

Diversification Opportunities for Banco Bradesco and Banco Macro

-0.61
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Banco and Banco is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Banco Macro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Macro SA and Banco 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 Banco Bradesco SA are associated (or correlated) with Banco Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Macro SA has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Banco Macro go up and down completely randomly.

Pair Corralation between Banco Bradesco and Banco Macro

Considering the 90-day investment horizon Banco Bradesco is expected to generate 28.01 times less return on investment than Banco Macro. But when comparing it to its historical volatility, Banco Bradesco SA is 1.29 times less risky than Banco Macro. It trades about 0.01 of its potential returns per unit of risk. Banco Macro SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,201  in Banco Macro SA on December 29, 2023 and sell it today you would earn a total of  3,966  from holding Banco Macro SA or generate 330.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Banco Bradesco SA  vs.  Banco Macro SA

 Performance 
       Timeline  
Banco Bradesco SA 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 unfluctuating performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Banco Macro SA 

Risk-Adjusted Performance

25 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Banco Macro SA are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, Banco Macro sustained solid returns over the last few months and may actually be approaching a breakup point.

Banco Bradesco and Banco Macro Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Banco Bradesco and Banco Macro

The main advantage of trading using opposite Banco Bradesco and Banco Macro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Banco Macro 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 Macro will offset losses from the drop in Banco Macro's long position.
The idea behind Banco Bradesco SA and Banco Macro 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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