Correlation Between Banco Bradesco and Southside Bancshares
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Southside Bancshares 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 Southside Bancshares 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 Southside Bancshares, you can compare the effects of market volatilities on Banco Bradesco and Southside Bancshares 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 Southside Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Southside Bancshares.
Diversification Opportunities for Banco Bradesco and Southside Bancshares
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Banco and Southside is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Southside Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southside Bancshares 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 Southside Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southside Bancshares has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Southside Bancshares go up and down completely randomly.
Pair Corralation between Banco Bradesco and Southside Bancshares
Given the investment horizon of 90 days Banco Bradesco SA is expected to under-perform the Southside Bancshares. In addition to that, Banco Bradesco is 1.55 times more volatile than Southside Bancshares. It trades about -0.19 of its total potential returns per unit of risk. Southside Bancshares is currently generating about -0.18 per unit of volatility. If you would invest 2,761 in Southside Bancshares on March 11, 2024 and sell it today you would lose (135.00) from holding Southside Bancshares or give up 4.89% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Banco Bradesco SA vs. Southside Bancshares
Performance |
Timeline |
Banco Bradesco SA |
Southside Bancshares |
Banco Bradesco and Southside Bancshares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Banco Bradesco and Southside Bancshares
The main advantage of trading using opposite Banco Bradesco and Southside Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Southside Bancshares 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 Southside Bancshares will offset losses from the drop in Southside Bancshares' long position.Banco Bradesco vs. Shinhan Financial Group | Banco Bradesco vs. Woori Financial Group | Banco Bradesco vs. Korea Electric Power | Banco Bradesco vs. Orix Corp Ads |
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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 the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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