Correlation Between Bread Financial and METISA Metalrgica

Can any of the company-specific risk be diversified away by investing in both Bread Financial and METISA Metalrgica 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 Bread Financial and METISA Metalrgica into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bread Financial Holdings and METISA Metalrgica Timboense, you can compare the effects of market volatilities on Bread Financial and METISA Metalrgica 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 Bread Financial with a short position of METISA Metalrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bread Financial and METISA Metalrgica.

Diversification Opportunities for Bread Financial and METISA Metalrgica

0.7

Correlation Coefficient

Bread Financial  METISA Metalrgica

Poor diversification

The 3 months correlation between Bread and METISA is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bread Financial Holdings and METISA Metalrgica Timboense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METISA Metalrgica and Bread Financial 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 Bread Financial Holdings are associated (or correlated) with METISA Metalrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METISA Metalrgica has no effect on the direction of Bread Financial i.e., Bread Financial and METISA Metalrgica go up and down completely randomly.

Pair Corralation between Bread Financial and METISA Metalrgica

Assuming the 90 days trading horizon Bread Financial Holdings is expected to generate 1.28 times more return on investment than METISA Metalrgica. However, Bread Financial is 1.28 times more volatile than METISA Metalrgica Timboense. It trades about 0.16 of its potential returns per unit of risk. METISA Metalrgica Timboense is currently generating about 0.09 per unit of risk. If you would invest  6,701  in Bread Financial Holdings on April 21, 2025 and sell it today you would earn a total of  1,750  from holding Bread Financial Holdings or generate 26.12% return on investment over 90 days.

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

Bread Financial Holdings  vs.  METISA Metalrgica Timboense

Bread Financial Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bread Financial Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Bread Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

METISA Metalrgica

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in METISA Metalrgica Timboense are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, METISA Metalrgica may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Bread Financial and METISA Metalrgica

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

The idea behind Bread Financial Holdings and METISA Metalrgica Timboense 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.