Correlation Between First Financial and Itau Unibanco
Can any of the company-specific risk be diversified away by investing in both First Financial 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 First Financial and Itau Unibanco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Financial Northwest and Itau Unibanco Banco, you can compare the effects of market volatilities on First Financial 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 First Financial with a short position of Itau Unibanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and Itau Unibanco.
Diversification Opportunities for First Financial and Itau Unibanco
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Itau is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding First Financial Northwest 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 First Financial 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 First Financial Northwest 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 First Financial i.e., First Financial and Itau Unibanco go up and down completely randomly.
Pair Corralation between First Financial and Itau Unibanco
Given the investment horizon of 90 days First Financial Northwest is expected to generate 0.63 times more return on investment than Itau Unibanco. However, First Financial Northwest is 1.59 times less risky than Itau Unibanco. It trades about 0.07 of its potential returns per unit of risk. Itau Unibanco Banco is currently generating about -0.01 per unit of risk. If you would invest 2,093 in First Financial Northwest on August 30, 2024 and sell it today you would earn a total of 177.00 from holding First Financial Northwest or generate 8.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Financial Northwest vs. Itau Unibanco Banco
Performance |
| Timeline |
| First Financial Northwest |
| Itau Unibanco Banco |
First Financial and Itau Unibanco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Financial and Itau Unibanco
The main advantage of trading using opposite First Financial and Itau Unibanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial 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.| First Financial vs. Home Federal Bancorp | First Financial vs. First Northwest Bancorp | First Financial vs. First Capital | First Financial vs. Community West Bancshares |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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