Correlation Between Itau Unibanco and Eurobank Ergasias
Can any of the company-specific risk be diversified away by investing in both Itau Unibanco and Eurobank Ergasias 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 Eurobank Ergasias 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 Eurobank Ergasias SA, you can compare the effects of market volatilities on Itau Unibanco and Eurobank Ergasias 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 Eurobank Ergasias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itau Unibanco and Eurobank Ergasias.
Diversification Opportunities for Itau Unibanco and Eurobank Ergasias
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Itau and Eurobank is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Itau Unibanco Banco and Eurobank Ergasias SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias 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 Eurobank Ergasias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurobank Ergasias has no effect on the direction of Itau Unibanco i.e., Itau Unibanco and Eurobank Ergasias go up and down completely randomly.
Pair Corralation between Itau Unibanco and Eurobank Ergasias
Given the investment horizon of 90 days Itau Unibanco Banco is expected to under-perform the Eurobank Ergasias. But the stock apears to be less risky and, when comparing its historical volatility, Itau Unibanco Banco is 1.23 times less risky than Eurobank Ergasias. The stock trades about -0.22 of its potential returns per unit of risk. The Eurobank Ergasias SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 100.00 in Eurobank Ergasias SA on August 29, 2024 and sell it today you would earn a total of 4.00 from holding Eurobank Ergasias SA or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Itau Unibanco Banco vs. Eurobank Ergasias SA
Performance |
| Timeline |
| Itau Unibanco Banco |
| Eurobank Ergasias |
Itau Unibanco and Eurobank Ergasias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itau Unibanco and Eurobank Ergasias
The main advantage of trading using opposite Itau Unibanco and Eurobank Ergasias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itau Unibanco position performs unexpectedly, Eurobank Ergasias 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 Eurobank Ergasias will offset losses from the drop in Eurobank Ergasias' 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 |
| Eurobank Ergasias vs. National Bank of | Eurobank Ergasias vs. Piraeus Bank SA | Eurobank Ergasias vs. Alpha Bank SA | Eurobank Ergasias vs. First Citizens BancShares |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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