Correlation Between Itau Unibanco and KB Financial
Can any of the company-specific risk be diversified away by investing in both Itau Unibanco and KB Financial 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 KB Financial 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 KB Financial Group, you can compare the effects of market volatilities on Itau Unibanco and KB Financial 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 KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itau Unibanco and KB Financial.
Diversification Opportunities for Itau Unibanco and KB Financial
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Itau and KB Financial is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Itau Unibanco Banco and KB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Financial Group 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 KB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Financial Group has no effect on the direction of Itau Unibanco i.e., Itau Unibanco and KB Financial go up and down completely randomly.
Pair Corralation between Itau Unibanco and KB Financial
Given the investment horizon of 90 days Itau Unibanco is expected to generate 6.81 times less return on investment than KB Financial. But when comparing it to its historical volatility, Itau Unibanco Banco is 1.35 times less risky than KB Financial. It trades about 0.02 of its potential returns per unit of risk. KB Financial Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,480 in KB Financial Group on August 28, 2024 and sell it today you would earn a total of 3,496 from holding KB Financial Group or generate 100.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Itau Unibanco Banco vs. KB Financial Group
Performance |
| Timeline |
| Itau Unibanco Banco |
| KB Financial Group |
Itau Unibanco and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itau Unibanco and KB Financial
The main advantage of trading using opposite Itau Unibanco and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itau Unibanco position performs unexpectedly, KB Financial 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 KB Financial will offset losses from the drop in KB Financial'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 |
| KB Financial vs. Banco Santander Brasil | KB Financial vs. CrossFirst Bankshares | KB Financial vs. Banco Bradesco SA | KB Financial vs. CF Bankshares |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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