Correlation Between BB Seguridade and Itau Unibanco
Can any of the company-specific risk be diversified away by investing in both BB Seguridade 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 BB Seguridade and Itau Unibanco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BB Seguridade Participacoes and Itau Unibanco Banco, you can compare the effects of market volatilities on BB Seguridade 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 BB Seguridade with a short position of Itau Unibanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Seguridade and Itau Unibanco.
Diversification Opportunities for BB Seguridade and Itau Unibanco
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BBSEY and Itau is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding BB Seguridade Participacoes 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 BB Seguridade 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 BB Seguridade Participacoes 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 BB Seguridade i.e., BB Seguridade and Itau Unibanco go up and down completely randomly.
Pair Corralation between BB Seguridade and Itau Unibanco
Assuming the 90 days horizon BB Seguridade is expected to generate 2.24 times less return on investment than Itau Unibanco. But when comparing it to its historical volatility, BB Seguridade Participacoes is 1.18 times less risky than Itau Unibanco. It trades about 0.02 of its potential returns per unit of risk. Itau Unibanco Banco is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 423.00 in Itau Unibanco Banco on August 24, 2024 and sell it today you would earn a total of 162.00 from holding Itau Unibanco Banco or generate 38.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BB Seguridade Participacoes vs. Itau Unibanco Banco
Performance |
| Timeline |
| BB Seguridade Partic |
| Itau Unibanco Banco |
BB Seguridade and Itau Unibanco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BB Seguridade and Itau Unibanco
The main advantage of trading using opposite BB Seguridade and Itau Unibanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Seguridade 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.| BB Seguridade vs. Assicurazioni Generali SpA | BB Seguridade vs. Athene Holding | BB Seguridade vs. ageas SANV | BB Seguridade vs. Athene Holding |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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