Correlation Between Banco Do and Sberbank

Can any of the company-specific risk be diversified away by investing in both Banco Do and Sberbank 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 Do and Sberbank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banco do Brasil and Sberbank Of Russia, you can compare the effects of market volatilities on Banco Do and Sberbank 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 Do with a short position of Sberbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Do and Sberbank.

Diversification Opportunities for Banco Do and Sberbank

0.0

Correlation Coefficient

Banco Do  Sberbank

Pay attention - limited upside

The 3 months correlation between Banco and Sberbank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Banco do Brasil and Sberbank Of Russia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sberbank Of Russia and Banco Do 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 do Brasil are associated (or correlated) with Sberbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sberbank Of Russia has no effect on the direction of Banco Do i.e., Banco Do and Sberbank go up and down completely randomly.

Pair Corralation between Banco Do and Sberbank

If you would invest  2,792  in Banco do Brasil on January 19, 2024 and sell it today you would earn a total of  5.00  from holding Banco do Brasil or generate 0.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Banco do Brasil  vs.  Sberbank Of Russia

Banco do Brasil

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Banco do Brasil are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Banco Do may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Sberbank Of Russia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sberbank Of Russia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Sberbank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Banco Do and Sberbank

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

The idea behind Banco do Brasil and Sberbank Of Russia 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.