Correlation Between Itau Unibanco and Centrais Electricas
Can any of the company-specific risk be diversified away by investing in both Itau Unibanco and Centrais Electricas 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 Centrais Electricas 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 Centrais Electricas Brasileiras, you can compare the effects of market volatilities on Itau Unibanco and Centrais Electricas 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 Centrais Electricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itau Unibanco and Centrais Electricas.
Diversification Opportunities for Itau Unibanco and Centrais Electricas
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Itau and Centrais is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Itau Unibanco Banco and Centrais Electricas Brasileira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Electricas 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 Centrais Electricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Electricas has no effect on the direction of Itau Unibanco i.e., Itau Unibanco and Centrais Electricas go up and down completely randomly.
Pair Corralation between Itau Unibanco and Centrais Electricas
Given the investment horizon of 90 days Itau Unibanco Banco is expected to generate 0.85 times more return on investment than Centrais Electricas. However, Itau Unibanco Banco is 1.18 times less risky than Centrais Electricas. It trades about -0.01 of its potential returns per unit of risk. Centrais Electricas Brasileiras is currently generating about -0.06 per unit of risk. If you would invest 621.00 in Itau Unibanco Banco on August 28, 2024 and sell it today you would lose (36.00) from holding Itau Unibanco Banco or give up 5.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.52% |
| Values | Daily Returns |
Itau Unibanco Banco vs. Centrais Electricas Brasileira
Performance |
| Timeline |
| Itau Unibanco Banco |
| Centrais Electricas |
Itau Unibanco and Centrais Electricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itau Unibanco and Centrais Electricas
The main advantage of trading using opposite Itau Unibanco and Centrais Electricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itau Unibanco position performs unexpectedly, Centrais Electricas 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 Centrais Electricas will offset losses from the drop in Centrais Electricas' 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 |
| Centrais Electricas vs. Genie Energy | Centrais Electricas vs. Central Puerto SA | Centrais Electricas vs. Korea Electric Power | Centrais Electricas vs. Empresa Distribuidora y |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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