Correlation Between Bread Financial and Patria Investments

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

Diversification Opportunities for Bread Financial and Patria Investments

0.71

Correlation Coefficient

Bread Financial  Patria Investments

Poor diversification

The 3 months correlation between Bread and Patria is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bread Financial Holdings and Patria Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments 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 Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of Bread Financial i.e., Bread Financial and Patria Investments go up and down completely randomly.

Pair Corralation between Bread Financial and Patria Investments

Assuming the 90 days trading horizon Bread Financial is expected to generate 1.09 times less return on investment than Patria Investments. In addition to that, Bread Financial is 1.84 times more volatile than Patria Investments Limited. It trades about 0.16 of its total potential returns per unit of risk. Patria Investments Limited is currently generating about 0.32 per unit of volatility. If you would invest  2,902  in Patria Investments Limited on April 22, 2025 and sell it today you would earn a total of  886.00  from holding Patria Investments Limited or generate 30.53% 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.  Patria Investments Limited

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 uncertain essential indicators, Bread Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Patria Investments

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Investments Limited are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Patria Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bread Financial and Patria Investments

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

The idea behind Bread Financial Holdings and Patria Investments Limited 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.