Correlation Between Banco Bradesco and Victory Bancorp

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

Diversification Opportunities for Banco Bradesco and Victory Bancorp

0.18

Correlation Coefficient

Banco Bradesco  Victory Bancorp

Average diversification

The 3 months correlation between Banco and Victory is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and The Victory Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory 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 Victory Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Bancorp has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Victory Bancorp go up and down completely randomly.

Pair Corralation between Banco Bradesco and Victory Bancorp

Assuming the 90 days trading horizon Banco Bradesco SA is expected to generate 1.08 times more return on investment than Victory Bancorp. However, Banco Bradesco is 1.08 times more volatile than The Victory Bancorp. It trades about -0.01 of its potential returns per unit of risk. The Victory Bancorp is currently generating about -0.02 per unit of risk. If you would invest  1,639  in Banco Bradesco SA on January 20, 2024 and sell it today you would lose (275.00) from holding Banco Bradesco SA or give up 16.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	78.3%
Values	Daily Returns

Banco Bradesco SA  vs.  The Victory 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 uncertain performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Victory Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Victory Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Victory Bancorp 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 Bradesco and Victory Bancorp

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

The idea behind Banco Bradesco SA and The Victory 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.