Correlation Between Banco Santander and Itau Unibanco
Can any of the company-specific risk be diversified away by investing in both Banco Santander 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 Banco Santander and Itau Unibanco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander Chile and Itau Unibanco Banco, you can compare the effects of market volatilities on Banco Santander 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 Banco Santander with a short position of Itau Unibanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Itau Unibanco.
Diversification Opportunities for Banco Santander and Itau Unibanco
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and Itau is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Chile 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 Banco Santander 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 Banco Santander Chile 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 Banco Santander i.e., Banco Santander and Itau Unibanco go up and down completely randomly.
Pair Corralation between Banco Santander and Itau Unibanco
Given the investment horizon of 90 days Banco Santander is expected to generate 1.11 times less return on investment than Itau Unibanco. But when comparing it to its historical volatility, Banco Santander Chile is 1.2 times less risky than Itau Unibanco. It trades about 0.04 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 435.00 in Itau Unibanco Banco on August 27, 2024 and sell it today you would earn a total of 150.00 from holding Itau Unibanco Banco or generate 34.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander Chile vs. Itau Unibanco Banco
Performance |
| Timeline |
| Banco Santander Chile |
| Itau Unibanco Banco |
Banco Santander and Itau Unibanco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Itau Unibanco
The main advantage of trading using opposite Banco Santander and Itau Unibanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander 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.| Banco Santander vs. Bancolombia SA ADR | Banco Santander vs. Banco Bradesco SA | Banco Santander vs. Credicorp | Banco Santander vs. Banco Santander Brasil |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |