Correlation Between Itau Unibanco and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Itau Unibanco and KeyCorp 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 KeyCorp 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 KeyCorp, you can compare the effects of market volatilities on Itau Unibanco and KeyCorp 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 KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itau Unibanco and KeyCorp.
Diversification Opportunities for Itau Unibanco and KeyCorp
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Itau and KeyCorp is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Itau Unibanco Banco and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Itau Unibanco i.e., Itau Unibanco and KeyCorp go up and down completely randomly.
Pair Corralation between Itau Unibanco and KeyCorp
Given the investment horizon of 90 days Itau Unibanco Banco is expected to under-perform the KeyCorp. In addition to that, Itau Unibanco is 2.8 times more volatile than KeyCorp. It trades about -0.23 of its total potential returns per unit of risk. KeyCorp is currently generating about -0.03 per unit of volatility. If you would invest 2,512 in KeyCorp on August 28, 2024 and sell it today you would lose (8.00) from holding KeyCorp or give up 0.32% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Itau Unibanco Banco vs. KeyCorp
Performance |
Timeline |
Itau Unibanco Banco |
KeyCorp |
Itau Unibanco and KeyCorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Itau Unibanco and KeyCorp
The main advantage of trading using opposite Itau Unibanco and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itau Unibanco position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp'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 |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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