Correlation Between Ita Unibanco and Itasa Investimentos
Can any of the company-specific risk be diversified away by investing in both Ita Unibanco and Itasa Investimentos 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 Itasa Investimentos 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 Itasa Investimentos, you can compare the effects of market volatilities on Ita Unibanco and Itasa Investimentos 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 Itasa Investimentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ita Unibanco and Itasa Investimentos.
Diversification Opportunities for Ita Unibanco and Itasa Investimentos
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ita and Itasa is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Ita Unibanco Holding and Itasa Investimentos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itasa Investimentos 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 Itasa Investimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itasa Investimentos has no effect on the direction of Ita Unibanco i.e., Ita Unibanco and Itasa Investimentos go up and down completely randomly.
Pair Corralation between Ita Unibanco and Itasa Investimentos
Assuming the 90 days trading horizon Ita Unibanco Holding is expected to under-perform the Itasa Investimentos. But the preferred stock apears to be less risky and, when comparing its historical volatility, Ita Unibanco Holding is 1.11 times less risky than Itasa Investimentos. The preferred stock trades about -0.23 of its potential returns per unit of risk. The Itasa Investimentos is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 1,056 in Itasa Investimentos on September 1, 2024 and sell it today you would lose (63.00) from holding Itasa Investimentos or give up 5.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ita Unibanco Holding vs. Itasa Investimentos
Performance |
| Timeline |
| Ita Unibanco Holding |
| Itasa Investimentos |
Ita Unibanco and Itasa Investimentos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ita Unibanco and Itasa Investimentos
The main advantage of trading using opposite Ita Unibanco and Itasa Investimentos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ita Unibanco position performs unexpectedly, Itasa Investimentos 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 Itasa Investimentos will offset losses from the drop in Itasa Investimentos' long position.| Ita Unibanco vs. Banco do Brasil | Ita Unibanco vs. Banco Bradesco SA | Ita Unibanco vs. Petrleo Brasileiro SA | Ita Unibanco vs. BB Seguridade Participacoes |
| Itasa Investimentos vs. Ita Unibanco Holding | Itasa Investimentos vs. Banco Bradesco SA | Itasa Investimentos vs. WEG SA | Itasa Investimentos vs. Engie Brasil Energia |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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