Correlation Between Itau Unibanco and First Mid
Can any of the company-specific risk be diversified away by investing in both Itau Unibanco and First Mid 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 First Mid 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 First Mid Illinois, you can compare the effects of market volatilities on Itau Unibanco and First Mid 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 First Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itau Unibanco and First Mid.
Diversification Opportunities for Itau Unibanco and First Mid
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Itau and First is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Itau Unibanco Banco and First Mid Illinois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mid Illinois 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 First Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mid Illinois has no effect on the direction of Itau Unibanco i.e., Itau Unibanco and First Mid go up and down completely randomly.
Pair Corralation between Itau Unibanco and First Mid
Given the investment horizon of 90 days Itau Unibanco Banco is expected to under-perform the First Mid. But the stock apears to be less risky and, when comparing its historical volatility, Itau Unibanco Banco is 1.2 times less risky than First Mid. The stock trades about -0.08 of its potential returns per unit of risk. The First Mid Illinois is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,763 in First Mid Illinois on October 25, 2024 and sell it today you would lose (1.00) from holding First Mid Illinois or give up 0.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Itau Unibanco Banco vs. First Mid Illinois
Performance |
| Timeline |
| Itau Unibanco Banco |
| First Mid Illinois |
Itau Unibanco and First Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itau Unibanco and First Mid
The main advantage of trading using opposite Itau Unibanco and First Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itau Unibanco position performs unexpectedly, First Mid 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 First Mid will offset losses from the drop in First Mid'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 |
| First Mid vs. Finward Bancorp | First Mid vs. Great Southern Bancorp | First Mid vs. Franklin Financial Services | First Mid vs. Community West 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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