Correlation Between Turkiye Garanti and Banco Bradesco

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Can any of the company-specific risk be diversified away by investing in both Turkiye Garanti 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 Turkiye Garanti and Banco Bradesco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Turkiye Garanti Bankasi and Banco Bradesco SA, you can compare the effects of market volatilities on Turkiye Garanti 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 Turkiye Garanti with a short position of Banco Bradesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turkiye Garanti and Banco Bradesco.

Diversification Opportunities for Turkiye Garanti and Banco Bradesco

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between Turkiye and Banco is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Turkiye Garanti Bankasi 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 Turkiye Garanti 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 Turkiye Garanti Bankasi 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 Turkiye Garanti i.e., Turkiye Garanti and Banco Bradesco go up and down completely randomly.

Pair Corralation between Turkiye Garanti and Banco Bradesco

Assuming the 90 days horizon Turkiye Garanti Bankasi is expected to generate 6.17 times more return on investment than Banco Bradesco. However, Turkiye Garanti is 6.17 times more volatile than Banco Bradesco SA. It trades about 0.16 of its potential returns per unit of risk. Banco Bradesco SA is currently generating about -0.08 per unit of risk. If you would invest  196.00  in Turkiye Garanti Bankasi on January 24, 2024 and sell it today you would earn a total of  37.00  from holding Turkiye Garanti Bankasi or generate 18.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Turkiye Garanti Bankasi  vs.  Banco Bradesco SA

 Performance 
       Timeline  
Turkiye Garanti Bankasi 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Turkiye Garanti Bankasi are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental drivers, Turkiye Garanti showed solid returns over the last few months and may actually be approaching a breakup point.
Banco Bradesco SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

Turkiye Garanti and Banco Bradesco Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Turkiye Garanti and Banco Bradesco

The main advantage of trading using opposite Turkiye Garanti and Banco Bradesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turkiye Garanti 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 Turkiye Garanti Bankasi 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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