Correlation Between Alfa Holdings and Ita Unibanco
Can any of the company-specific risk be diversified away by investing in both Alfa Holdings and Ita Unibanco 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 Alfa Holdings and Ita Unibanco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Holdings SA and Ita Unibanco Holding, you can compare the effects of market volatilities on Alfa Holdings and Ita Unibanco 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 Alfa Holdings with a short position of Ita Unibanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Holdings and Ita Unibanco.
Diversification Opportunities for Alfa Holdings and Ita Unibanco
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alfa and Ita is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Holdings SA and Ita Unibanco Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ita Unibanco Holding and Alfa Holdings 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 Alfa Holdings SA are associated (or correlated) with Ita Unibanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ita Unibanco Holding has no effect on the direction of Alfa Holdings i.e., Alfa Holdings and Ita Unibanco go up and down completely randomly.
Pair Corralation between Alfa Holdings and Ita Unibanco
Assuming the 90 days trading horizon Alfa Holdings SA is expected to generate 3.8 times more return on investment than Ita Unibanco. However, Alfa Holdings is 3.8 times more volatile than Ita Unibanco Holding. It trades about 0.22 of its potential returns per unit of risk. Ita Unibanco Holding is currently generating about -0.1 per unit of risk. If you would invest 726.00 in Alfa Holdings SA on September 13, 2024 and sell it today you would earn a total of 183.00 from holding Alfa Holdings SA or generate 25.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Holdings SA vs. Ita Unibanco Holding
Performance |
| Timeline |
| Alfa Holdings SA |
| Ita Unibanco Holding |
Alfa Holdings and Ita Unibanco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Holdings and Ita Unibanco
The main advantage of trading using opposite Alfa Holdings and Ita Unibanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Holdings position performs unexpectedly, Ita Unibanco 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 Ita Unibanco will offset losses from the drop in Ita Unibanco's long position.| Alfa Holdings vs. Ita Unibanco Holding | Alfa Holdings vs. Banco do Brasil | Alfa Holdings vs. Itasa Investimentos | Alfa Holdings vs. Petrleo Brasileiro SA |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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