Correlation Between Banco Bradesco and Sturgis Bancorp

Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Sturgis Bancorp 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 Sturgis Bancorp 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 Sturgis Bancorp, you can compare the effects of market volatilities on Banco Bradesco and Sturgis Bancorp 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 Sturgis Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Sturgis Bancorp.

Diversification Opportunities for Banco Bradesco and Sturgis Bancorp

0.63

Correlation Coefficient

Banco Bradesco  Sturgis Bancorp

Poor diversification

The 3 months correlation between Banco and Sturgis is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Sturgis Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sturgis Bancorp 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 Sturgis Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sturgis Bancorp has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Sturgis Bancorp go up and down completely randomly.

Pair Corralation between Banco Bradesco and Sturgis Bancorp

If you would invest  1,675  in Sturgis Bancorp on February 2, 2024 and sell it today you would earn a total of  0.00  from holding Sturgis Bancorp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.35%
Values	Daily Returns

Banco Bradesco SA  vs.  Sturgis Bancorp

Banco Bradesco SA

Risk-Adjusted Performance

0 of 100

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 latest conflicting performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Sturgis Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sturgis Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Banco Bradesco and Sturgis Bancorp

The main advantage of trading using opposite Banco Bradesco and Sturgis Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Sturgis Bancorp 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 Sturgis Bancorp will offset losses from the drop in Sturgis Bancorp's long position.

The idea behind Banco Bradesco SA and Sturgis Bancorp 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.