Correlation Between Washington Federal and Banco Bradesco
Can any of the company-specific risk be diversified away by investing in both Washington Federal and Banco 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 Washington Federal and Banco Bradesco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Federal and Banco Bradesco SA, you can compare the effects of market volatilities on Washington Federal and Banco 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 Washington Federal with a short position of Banco Bradesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Federal and Banco Bradesco.
Diversification Opportunities for Washington Federal and Banco Bradesco
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Washington and Banco is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal and Banco Bradesco SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Bradesco SA and Washington Federal 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 Washington Federal are associated (or correlated) with Banco Bradesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Bradesco SA has no effect on the direction of Washington Federal i.e., Washington Federal and Banco Bradesco go up and down completely randomly.
Pair Corralation between Washington Federal and Banco Bradesco
Given the investment horizon of 90 days Washington Federal is expected to generate 1.43 times more return on investment than Banco Bradesco. However, Washington Federal is 1.43 times more volatile than Banco Bradesco SA. It trades about -0.01 of its potential returns per unit of risk. Banco Bradesco SA is currently generating about -0.13 per unit of risk. If you would invest 2,727 in Washington Federal on January 17, 2024 and sell it today you would lose (28.00) from holding Washington Federal or give up 1.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Federal vs. Banco Bradesco SA
Performance |
| Timeline |
| Washington Federal |
| Banco Bradesco SA |
Washington Federal and Banco Bradesco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Federal and Banco Bradesco
The main advantage of trading using opposite Washington Federal and Banco Bradesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Federal position performs unexpectedly, Banco 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 Banco Bradesco will offset losses from the drop in Banco Bradesco's long position.| Washington Federal vs. National Bank Holdings | Washington Federal vs. Community West Bancshares | Washington Federal vs. First Capital | Washington Federal vs. BCB Bancorp |
| Banco Bradesco vs. Woori Financial Group | Banco Bradesco vs. Korea Electric Power | Banco Bradesco vs. Orix Corp Ads | Banco Bradesco vs. SK Telecom Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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