Correlation Between Ita Unibanco and BB Seguridade
Can any of the company-specific risk be diversified away by investing in both Ita Unibanco and BB Seguridade 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 BB Seguridade 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 BB Seguridade Participacoes, you can compare the effects of market volatilities on Ita Unibanco and BB Seguridade 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 BB Seguridade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ita Unibanco and BB Seguridade.
Diversification Opportunities for Ita Unibanco and BB Seguridade
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ita and BBSE3 is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ita Unibanco Holding and BB Seguridade Participacoes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Seguridade Partic 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 BB Seguridade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Seguridade Partic has no effect on the direction of Ita Unibanco i.e., Ita Unibanco and BB Seguridade go up and down completely randomly.
Pair Corralation between Ita Unibanco and BB Seguridade
Assuming the 90 days trading horizon Ita Unibanco Holding is expected to generate 1.02 times more return on investment than BB Seguridade. However, Ita Unibanco is 1.02 times more volatile than BB Seguridade Participacoes. It trades about 0.07 of its potential returns per unit of risk. BB Seguridade Participacoes is currently generating about 0.05 per unit of risk. If you would invest 2,463 in Ita Unibanco Holding on August 31, 2024 and sell it today you would earn a total of 797.00 from holding Ita Unibanco Holding or generate 32.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.94% |
| Values | Daily Returns |
Ita Unibanco Holding vs. BB Seguridade Participacoes
Performance |
| Timeline |
| Ita Unibanco Holding |
| BB Seguridade Partic |
Ita Unibanco and BB Seguridade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ita Unibanco and BB Seguridade
The main advantage of trading using opposite Ita Unibanco and BB Seguridade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ita Unibanco position performs unexpectedly, BB Seguridade 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 BB Seguridade will offset losses from the drop in BB Seguridade'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 |
| BB Seguridade vs. Banco Bradesco SA | BB Seguridade vs. Petrleo Brasileiro SA | BB Seguridade vs. Ita Unibanco Holding | BB Seguridade 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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