Correlation Between Banco Bradesco and LivaNova PLC

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

Diversification Opportunities for Banco Bradesco and LivaNova PLC

-0.59

Correlation Coefficient

Banco Bradesco  LivaNova PLC

Excellent diversification

The 3 months correlation between Banco and LivaNova is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and LivaNova PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LivaNova PLC 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 LivaNova PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LivaNova PLC has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and LivaNova PLC go up and down completely randomly.

Pair Corralation between Banco Bradesco and LivaNova PLC

Given the investment horizon of 90 days Banco Bradesco SA is expected to under-perform the LivaNova PLC. In addition to that, Banco Bradesco is 1.17 times more volatile than LivaNova PLC. It trades about -0.14 of its total potential returns per unit of risk. LivaNova PLC is currently generating about 0.13 per unit of volatility. If you would invest  4,598  in LivaNova PLC on August 17, 2024 and sell it today you would earn a total of  634.00  from holding LivaNova PLC or generate 13.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Banco Bradesco SA  vs.  LivaNova PLC

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 conflicting performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

LivaNova PLC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LivaNova PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, LivaNova PLC displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banco Bradesco and LivaNova PLC

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

The idea behind Banco Bradesco SA and LivaNova PLC 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.