Correlation Between Itau Unibanco and Truist Financial
Can any of the company-specific risk be diversified away by investing in both Itau Unibanco and Truist 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 Truist 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 Truist Financial Corp, you can compare the effects of market volatilities on Itau Unibanco and Truist 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 Truist Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itau Unibanco and Truist Financial.
Diversification Opportunities for Itau Unibanco and Truist Financial
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Itau and Truist is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Itau Unibanco Banco and Truist Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial Corp 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 Truist Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truist Financial Corp has no effect on the direction of Itau Unibanco i.e., Itau Unibanco and Truist Financial go up and down completely randomly.
Pair Corralation between Itau Unibanco and Truist Financial
Given the investment horizon of 90 days Itau Unibanco Banco is expected to under-perform the Truist Financial. But the stock apears to be less risky and, when comparing its historical volatility, Itau Unibanco Banco is 1.04 times less risky than Truist Financial. The stock trades about -0.01 of its potential returns per unit of risk. The Truist Financial Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,520 in Truist Financial Corp on August 28, 2024 and sell it today you would earn a total of 1,290 from holding Truist Financial Corp or generate 36.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
Itau Unibanco Banco vs. Truist Financial Corp
Performance |
| Timeline |
| Itau Unibanco Banco |
| Truist Financial Corp |
Itau Unibanco and Truist Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itau Unibanco and Truist Financial
The main advantage of trading using opposite Itau Unibanco and Truist Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itau Unibanco position performs unexpectedly, Truist 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 Truist Financial will offset losses from the drop in Truist 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 |
| Truist Financial vs. PNC Financial Services | Truist Financial vs. KeyCorp | Truist Financial vs. Western Alliance Bancorporation | Truist Financial vs. Zions Bancorporation |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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