Correlation Between VanEck Semiconductor and Banco Bradesco

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

By analyzing existing cross correlation between VanEck Semiconductor ETF and Banco Bradesco SA, you can compare the effects of market volatilities on VanEck Semiconductor 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 VanEck Semiconductor with a short position of Banco Bradesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Semiconductor and Banco Bradesco.

Diversification Opportunities for VanEck Semiconductor and Banco Bradesco

-0.63

Correlation Coefficient

VanEck Semiconductor  Banco Bradesco

Excellent diversification

The 3 months correlation between VanEck and Banco is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Semiconductor ETF 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 VanEck Semiconductor 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 VanEck Semiconductor ETF 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 VanEck Semiconductor i.e., VanEck Semiconductor and Banco Bradesco go up and down completely randomly.

Pair Corralation between VanEck Semiconductor and Banco Bradesco

Considering the 90-day investment horizon VanEck Semiconductor ETF is expected to generate 0.96 times more return on investment than Banco Bradesco. However, VanEck Semiconductor ETF is 1.05 times less risky than Banco Bradesco. It trades about -0.17 of its potential returns per unit of risk. Banco Bradesco SA is currently generating about -0.24 per unit of risk. If you would invest  22,129  in VanEck Semiconductor ETF on January 20, 2024 and sell it today you would lose (1,266) from holding VanEck Semiconductor ETF or give up 5.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

VanEck Semiconductor ETF  vs.  Banco Bradesco SA

VanEck Semiconductor ETF

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Semiconductor ETF are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile primary indicators, VanEck Semiconductor may actually be approaching a critical reversion point that can send shares even higher in May 2024.

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 weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with VanEck Semiconductor and Banco Bradesco

The main advantage of trading using opposite VanEck Semiconductor and Banco Bradesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Semiconductor 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.

The idea behind VanEck Semiconductor ETF and Banco Bradesco SA 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.