Correlation Between Bank Of and Companhia

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

By analyzing existing cross correlation between The Bank of and Companhia de Saneamento, you can compare the effects of market volatilities on Bank Of and Companhia 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 Bank Of with a short position of Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Of and Companhia.

Diversification Opportunities for Bank Of and Companhia

0.61

Correlation Coefficient

Bank Of  Companhia

Poor diversification

The 3 months correlation between Bank and Companhia is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and Companhia de Saneamento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Saneamento and Bank Of 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 The Bank of are associated (or correlated) with Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Saneamento has no effect on the direction of Bank Of i.e., Bank Of and Companhia go up and down completely randomly.

Pair Corralation between Bank Of and Companhia

Assuming the 90 days trading horizon The Bank of is expected to generate 0.87 times more return on investment than Companhia. However, The Bank of is 1.15 times less risky than Companhia. It trades about 0.26 of its potential returns per unit of risk. Companhia de Saneamento is currently generating about 0.21 per unit of risk. If you would invest  43,824  in The Bank of on April 24, 2025 and sell it today you would earn a total of  11,066  from holding The Bank of or generate 25.25% return on investment over 90 days.

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

The Bank of  vs.  Companhia de Saneamento

The Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Bank of are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bank Of sustained solid returns over the last few months and may actually be approaching a breakup point.

Companhia de Saneamento

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia de Saneamento are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Companhia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Of and Companhia

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

The idea behind The Bank of and Companhia de Saneamento 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.