Correlation Between Ita Unibanco and WEG SA
Can any of the company-specific risk be diversified away by investing in both Ita Unibanco and WEG SA 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 Ita Unibanco and WEG SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ita Unibanco Holding and WEG SA, you can compare the effects of market volatilities on Ita Unibanco and WEG SA 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 Ita Unibanco with a short position of WEG SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ita Unibanco and WEG SA.
Diversification Opportunities for Ita Unibanco and WEG SA
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ita and WEG is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ita Unibanco Holding and WEG SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEG SA and Ita 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 Ita Unibanco Holding are associated (or correlated) with WEG SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEG SA has no effect on the direction of Ita Unibanco i.e., Ita Unibanco and WEG SA go up and down completely randomly.
Pair Corralation between Ita Unibanco and WEG SA
Assuming the 90 days trading horizon Ita Unibanco Holding is expected to generate 0.79 times more return on investment than WEG SA. However, Ita Unibanco Holding is 1.26 times less risky than WEG SA. It trades about -0.15 of its potential returns per unit of risk. WEG SA is currently generating about -0.27 per unit of risk. If you would invest 3,049 in Ita Unibanco Holding on August 30, 2024 and sell it today you would lose (126.00) from holding Ita Unibanco Holding or give up 4.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ita Unibanco Holding vs. WEG SA
Performance |
| Timeline |
| Ita Unibanco Holding |
| WEG SA |
Ita Unibanco and WEG SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ita Unibanco and WEG SA
The main advantage of trading using opposite Ita Unibanco and WEG SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ita Unibanco position performs unexpectedly, WEG SA 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 WEG SA will offset losses from the drop in WEG SA's long position.| Ita Unibanco vs. Banco Bradesco SA | Ita Unibanco vs. Engie Brasil Energia | Ita Unibanco vs. Itasa Investimentos | Ita Unibanco vs. Porto Seguro SA |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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