Correlation Between Itau Unibanco and BBVA Banco
Can any of the company-specific risk be diversified away by investing in both Itau Unibanco and BBVA Banco 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 Itau Unibanco and BBVA Banco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itau Unibanco Banco and BBVA Banco Frances, you can compare the effects of market volatilities on Itau Unibanco and BBVA Banco 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 Itau Unibanco with a short position of BBVA Banco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itau Unibanco and BBVA Banco.
Diversification Opportunities for Itau Unibanco and BBVA Banco
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Itau and BBVA is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Itau Unibanco Banco and BBVA Banco Frances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBVA Banco Frances and Itau Unibanco 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 Itau Unibanco Banco are associated (or correlated) with BBVA Banco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBVA Banco Frances has no effect on the direction of Itau Unibanco i.e., Itau Unibanco and BBVA Banco go up and down completely randomly.
Pair Corralation between Itau Unibanco and BBVA Banco
Given the investment horizon of 90 days Itau Unibanco Banco is expected to generate 0.43 times more return on investment than BBVA Banco. However, Itau Unibanco Banco is 2.31 times less risky than BBVA Banco. It trades about 0.44 of its potential returns per unit of risk. BBVA Banco Frances is currently generating about 0.07 per unit of risk. If you would invest 495.00 in Itau Unibanco Banco on November 3, 2024 and sell it today you would earn a total of 85.00 from holding Itau Unibanco Banco or generate 17.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Itau Unibanco Banco vs. BBVA Banco Frances
Performance |
| Timeline |
| Itau Unibanco Banco |
| BBVA Banco Frances |
Itau Unibanco and BBVA Banco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itau Unibanco and BBVA Banco
The main advantage of trading using opposite Itau Unibanco and BBVA Banco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itau Unibanco position performs unexpectedly, BBVA Banco 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 BBVA Banco will offset losses from the drop in BBVA Banco's long position.| Itau Unibanco vs. Grupo Financiero Galicia | Itau Unibanco vs. Banco Macro SA | Itau Unibanco vs. Banco Santander Brasil | Itau Unibanco vs. Lloyds Banking Group |
| BBVA Banco vs. Banco Macro SA | BBVA Banco vs. Grupo Financiero Galicia | BBVA Banco vs. Banco Bradesco SA | BBVA Banco vs. Itau Unibanco Banco |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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