Correlation Between Bancolombia and Itau Unibanco
Can any of the company-specific risk be diversified away by investing in both Bancolombia 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 Bancolombia and Itau Unibanco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bancolombia SA ADR and Itau Unibanco Banco, you can compare the effects of market volatilities on Bancolombia 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 Bancolombia with a short position of Itau Unibanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bancolombia and Itau Unibanco.
Diversification Opportunities for Bancolombia and Itau Unibanco
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bancolombia and Itau is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bancolombia SA ADR 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 Bancolombia 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 Bancolombia SA ADR 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 Bancolombia i.e., Bancolombia and Itau Unibanco go up and down completely randomly.
Pair Corralation between Bancolombia and Itau Unibanco
Considering the 90-day investment horizon Bancolombia SA ADR is expected to generate 1.13 times more return on investment than Itau Unibanco. However, Bancolombia is 1.13 times more volatile than Itau Unibanco Banco. It trades about 0.56 of its potential returns per unit of risk. Itau Unibanco Banco is currently generating about 0.52 per unit of risk. If you would invest 3,199 in Bancolombia SA ADR on November 4, 2024 and sell it today you would earn a total of 756.00 from holding Bancolombia SA ADR or generate 23.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bancolombia SA ADR vs. Itau Unibanco Banco
Performance |
| Timeline |
| Bancolombia SA ADR |
| Itau Unibanco Banco |
Bancolombia and Itau Unibanco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bancolombia and Itau Unibanco
The main advantage of trading using opposite Bancolombia and Itau Unibanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bancolombia 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.| Bancolombia vs. Shinhan Financial Group | Bancolombia vs. Woori Financial Group | Bancolombia vs. Korea Electric Power | Bancolombia vs. Orix Corp Ads |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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