Correlation Between Itau Unibanco and Farmers Bancorp
Can any of the company-specific risk be diversified away by investing in both Itau Unibanco and Farmers Bancorp 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 Farmers Bancorp 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 Farmers Bancorp, you can compare the effects of market volatilities on Itau Unibanco and Farmers Bancorp 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 Farmers Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itau Unibanco and Farmers Bancorp.
Diversification Opportunities for Itau Unibanco and Farmers Bancorp
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Itau and Farmers is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Itau Unibanco Banco and Farmers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bancorp 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 Farmers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bancorp has no effect on the direction of Itau Unibanco i.e., Itau Unibanco and Farmers Bancorp go up and down completely randomly.
Pair Corralation between Itau Unibanco and Farmers Bancorp
Given the investment horizon of 90 days Itau Unibanco Banco is expected to generate 1.07 times more return on investment than Farmers Bancorp. However, Itau Unibanco is 1.07 times more volatile than Farmers Bancorp. It trades about 0.01 of its potential returns per unit of risk. Farmers Bancorp is currently generating about -0.01 per unit of risk. If you would invest 494.00 in Itau Unibanco Banco on September 26, 2024 and sell it today you would earn a total of 3.00 from holding Itau Unibanco Banco or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 69.13% |
| Values | Daily Returns |
Itau Unibanco Banco vs. Farmers Bancorp
Performance |
| Timeline |
| Itau Unibanco Banco |
| Farmers Bancorp |
Itau Unibanco and Farmers Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itau Unibanco and Farmers Bancorp
The main advantage of trading using opposite Itau Unibanco and Farmers Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itau Unibanco position performs unexpectedly, Farmers Bancorp 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 Farmers Bancorp will offset losses from the drop in Farmers Bancorp'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 |
| Farmers Bancorp vs. Banco Bradesco SA | Farmers Bancorp vs. Itau Unibanco Banco | Farmers Bancorp vs. Deutsche Bank AG | Farmers Bancorp vs. Banco Santander Brasil |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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