Correlation Between YPF SA and Banco Bradesco

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

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

Diversification Opportunities for YPF SA and Banco Bradesco

-0.92

Correlation Coefficient

YPF SA  Banco Bradesco

Pay attention - limited upside

The 3 months correlation between YPF and Banco is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding YPF SA D and Banco Bradesco DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Bradesco DRC and YPF SA 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 YPF SA D 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 DRC has no effect on the direction of YPF SA i.e., YPF SA and Banco Bradesco go up and down completely randomly.

Pair Corralation between YPF SA and Banco Bradesco

Assuming the 90 days trading horizon YPF SA D is expected to generate 1.52 times more return on investment than Banco Bradesco. However, YPF SA is 1.52 times more volatile than Banco Bradesco DRC. It trades about 0.16 of its potential returns per unit of risk. Banco Bradesco DRC is currently generating about 0.0 per unit of risk. If you would invest  1,029,720  in YPF SA D on September 19, 2024 and sell it today you would earn a total of  3,995,280  from holding YPF SA D or generate 388.0% return on investment over 90 days.

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

YPF SA D  vs.  Banco Bradesco DRC

YPF SA D

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in YPF SA D are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, YPF SA sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with YPF SA and Banco Bradesco

The main advantage of trading using opposite YPF SA and Banco Bradesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YPF SA 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 YPF SA D and Banco Bradesco DRC 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.