Correlation Between Ita Unibanco and Ambev SA
Can any of the company-specific risk be diversified away by investing in both Ita Unibanco and Ambev 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 Ambev 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 Ambev SA, you can compare the effects of market volatilities on Ita Unibanco and Ambev 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 Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ita Unibanco and Ambev SA.
Diversification Opportunities for Ita Unibanco and Ambev SA
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ita and Ambev is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ita Unibanco Holding and Ambev SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev 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 Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA has no effect on the direction of Ita Unibanco i.e., Ita Unibanco and Ambev SA go up and down completely randomly.
Pair Corralation between Ita Unibanco and Ambev SA
Assuming the 90 days trading horizon Ita Unibanco Holding is expected to generate 1.14 times more return on investment than Ambev SA. However, Ita Unibanco is 1.14 times more volatile than Ambev SA. It trades about 0.27 of its potential returns per unit of risk. Ambev SA is currently generating about 0.02 per unit of risk. If you would invest 3,233 in Ita Unibanco Holding on November 18, 2024 and sell it today you would earn a total of 244.00 from holding Ita Unibanco Holding or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ita Unibanco Holding vs. Ambev SA
Performance |
| Timeline |
| Ita Unibanco Holding |
| Ambev SA |
Ita Unibanco and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ita Unibanco and Ambev SA
The main advantage of trading using opposite Ita Unibanco and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ita Unibanco position performs unexpectedly, Ambev 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 Ambev SA will offset losses from the drop in Ambev SA's long position.| Ita Unibanco vs. Banco Bradesco SA | Ita Unibanco vs. Banco do Brasil | Ita Unibanco vs. Vale SA | Ita Unibanco vs. Itasa Investimentos |
| Ambev SA vs. WEG SA | Ambev SA vs. Ita Unibanco Holding | Ambev SA vs. Itasa Investimentos | Ambev SA vs. Banco Bradesco 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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