Correlation Between Ita Unibanco and CTEEP Companhia
Can any of the company-specific risk be diversified away by investing in both Ita Unibanco and CTEEP Companhia 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 CTEEP Companhia 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 CTEEP Companhia, you can compare the effects of market volatilities on Ita Unibanco and CTEEP Companhia 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 CTEEP Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ita Unibanco and CTEEP Companhia.
Diversification Opportunities for Ita Unibanco and CTEEP Companhia
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ita and CTEEP is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ita Unibanco Holding and CTEEP Companhia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTEEP Companhia 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 CTEEP Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTEEP Companhia has no effect on the direction of Ita Unibanco i.e., Ita Unibanco and CTEEP Companhia go up and down completely randomly.
Pair Corralation between Ita Unibanco and CTEEP Companhia
Assuming the 90 days trading horizon Ita Unibanco Holding is expected to under-perform the CTEEP Companhia. In addition to that, Ita Unibanco is 1.26 times more volatile than CTEEP Companhia. It trades about -0.23 of its total potential returns per unit of risk. CTEEP Companhia is currently generating about -0.02 per unit of volatility. If you would invest 2,429 in CTEEP Companhia on September 1, 2024 and sell it today you would lose (13.00) from holding CTEEP Companhia or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ita Unibanco Holding vs. CTEEP Companhia
Performance |
| Timeline |
| Ita Unibanco Holding |
| CTEEP Companhia |
Ita Unibanco and CTEEP Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ita Unibanco and CTEEP Companhia
The main advantage of trading using opposite Ita Unibanco and CTEEP Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ita Unibanco position performs unexpectedly, CTEEP Companhia 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 CTEEP Companhia will offset losses from the drop in CTEEP Companhia's 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 |
| CTEEP Companhia vs. Transmissora Aliana de | CTEEP Companhia vs. Companhia Paranaense de | CTEEP Companhia vs. BB Seguridade Participacoes | CTEEP Companhia 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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