Correlation Between Itau Unibanco and Fifth Third
Can any of the company-specific risk be diversified away by investing in both Itau Unibanco and Fifth Third 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 Fifth Third 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 Fifth Third Bancorp, you can compare the effects of market volatilities on Itau Unibanco and Fifth Third 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 Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itau Unibanco and Fifth Third.
Diversification Opportunities for Itau Unibanco and Fifth Third
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Itau and Fifth is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Itau Unibanco Banco and Fifth Third Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fifth Third 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 Fifth Third. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fifth Third Bancorp has no effect on the direction of Itau Unibanco i.e., Itau Unibanco and Fifth Third go up and down completely randomly.
Pair Corralation between Itau Unibanco and Fifth Third
Given the investment horizon of 90 days Itau Unibanco Banco is expected to generate 0.99 times more return on investment than Fifth Third. However, Itau Unibanco Banco is 1.01 times less risky than Fifth Third. It trades about 0.43 of its potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.11 per unit of risk. If you would invest 507.00 in Itau Unibanco Banco on November 6, 2024 and sell it today you would earn a total of 69.00 from holding Itau Unibanco Banco or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Itau Unibanco Banco vs. Fifth Third Bancorp
Performance |
| Timeline |
| Itau Unibanco Banco |
| Fifth Third Bancorp |
Itau Unibanco and Fifth Third Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itau Unibanco and Fifth Third
The main advantage of trading using opposite Itau Unibanco and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itau Unibanco position performs unexpectedly, Fifth Third 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 Fifth Third will offset losses from the drop in Fifth Third'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 |
| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third vs. Huntington Bancshares Incorporated |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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