Correlation Between Ita Unibanco and B3 SA
Can any of the company-specific risk be diversified away by investing in both Ita Unibanco and B3 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 B3 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 B3 SA , you can compare the effects of market volatilities on Ita Unibanco and B3 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 B3 SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ita Unibanco and B3 SA.
Diversification Opportunities for Ita Unibanco and B3 SA
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ita and B3SA3 is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ita Unibanco Holding and B3 SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B3 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 B3 SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B3 SA has no effect on the direction of Ita Unibanco i.e., Ita Unibanco and B3 SA go up and down completely randomly.
Pair Corralation between Ita Unibanco and B3 SA
Assuming the 90 days trading horizon Ita Unibanco Holding is expected to generate 0.65 times more return on investment than B3 SA. However, Ita Unibanco Holding is 1.53 times less risky than B3 SA. It trades about -0.32 of its potential returns per unit of risk. B3 SA is currently generating about -0.33 per unit of risk. If you would invest 3,526 in Ita Unibanco Holding on September 3, 2024 and sell it today you would lose (314.00) from holding Ita Unibanco Holding or give up 8.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ita Unibanco Holding vs. B3 SA
Performance |
| Timeline |
| Ita Unibanco Holding |
| B3 SA |
Ita Unibanco and B3 SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ita Unibanco and B3 SA
The main advantage of trading using opposite Ita Unibanco and B3 SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ita Unibanco position performs unexpectedly, B3 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 B3 SA will offset losses from the drop in B3 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 |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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