Correlation Between Banco Bradesco and Boeing Co

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

By analyzing existing cross correlation between Banco Bradesco DRC and Boeing Co CEDEAR, you can compare the effects of market volatilities on Banco Bradesco and Boeing Co 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 Boeing Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Boeing Co.

Diversification Opportunities for Banco Bradesco and Boeing Co

0.46

Correlation Coefficient

Banco Bradesco  Boeing Co

Very weak diversification

The 3 months correlation between Banco and Boeing is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco DRC and Boeing Co CEDEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing Co CEDEAR 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 DRC are associated (or correlated) with Boeing Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing Co CEDEAR has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Boeing Co go up and down completely randomly.

Pair Corralation between Banco Bradesco and Boeing Co

Assuming the 90 days trading horizon Banco Bradesco DRC is expected to under-perform the Boeing Co. In addition to that, Banco Bradesco is 1.06 times more volatile than Boeing Co CEDEAR. It trades about -0.28 of its total potential returns per unit of risk. Boeing Co CEDEAR is currently generating about 0.45 per unit of volatility. If you would invest  672,000  in Boeing Co CEDEAR on September 19, 2024 and sell it today you would earn a total of  170,000  from holding Boeing Co CEDEAR or generate 25.3% return on investment over 90 days.

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

Banco Bradesco DRC  vs.  Boeing Co CEDEAR

Banco Bradesco DRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Bradesco DRC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Boeing Co CEDEAR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Boeing Co CEDEAR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Boeing Co may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Banco Bradesco and Boeing Co

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

The idea behind Banco Bradesco DRC and Boeing Co CEDEAR 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.