Correlation Between Credicorp and Itau Unibanco
Can any of the company-specific risk be diversified away by investing in both Credicorp and Itau Unibanco 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 Credicorp and Itau Unibanco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credicorp and Itau Unibanco Banco, you can compare the effects of market volatilities on Credicorp and Itau Unibanco 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 Credicorp with a short position of Itau Unibanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credicorp and Itau Unibanco.
Diversification Opportunities for Credicorp and Itau Unibanco
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Credicorp and Itau is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Credicorp and Itau Unibanco Banco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itau Unibanco Banco and Credicorp 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 Credicorp are associated (or correlated) with Itau Unibanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itau Unibanco Banco has no effect on the direction of Credicorp i.e., Credicorp and Itau Unibanco go up and down completely randomly.
Pair Corralation between Credicorp and Itau Unibanco
Considering the 90-day investment horizon Credicorp is expected to generate 0.92 times more return on investment than Itau Unibanco. However, Credicorp is 1.09 times less risky than Itau Unibanco. It trades about 0.01 of its potential returns per unit of risk. Itau Unibanco Banco is currently generating about -0.23 per unit of risk. If you would invest 19,189 in Credicorp on August 28, 2024 and sell it today you would lose (2.00) from holding Credicorp or give up 0.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Credicorp vs. Itau Unibanco Banco
Performance |
| Timeline |
| Credicorp |
| Itau Unibanco Banco |
Credicorp and Itau Unibanco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credicorp and Itau Unibanco
The main advantage of trading using opposite Credicorp and Itau Unibanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credicorp position performs unexpectedly, Itau Unibanco 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 Itau Unibanco will offset losses from the drop in Itau Unibanco's long position.| Credicorp vs. Heritage Financial | Credicorp vs. Home Federal Bancorp | Credicorp vs. Magyar Bancorp | Credicorp vs. National Bankshares |
| Itau Unibanco vs. Grupo Financiero Galicia | Itau Unibanco vs. Banco Macro SA | Itau Unibanco vs. Banco Santander Brasil | Itau Unibanco vs. Lloyds Banking Group |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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