Correlation Between Truist Financial and Itau Unibanco

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Can any of the company-specific risk be diversified away by investing in both Truist Financial and Itau 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 Truist Financial and Itau Unibanco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and Itau Unibanco Banco, you can compare the effects of market volatilities on Truist Financial and Itau 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 Truist Financial with a short position of Itau Unibanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Itau Unibanco.

Diversification Opportunities for Truist Financial and Itau Unibanco

TruistItauDiversified AwayTruistItauDiversified Away100%
0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Truist and Itau is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Itau Unibanco Banco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itau Unibanco Banco and Truist Financial 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 Truist Financial are associated (or correlated) with Itau Unibanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itau Unibanco Banco has no effect on the direction of Truist Financial i.e., Truist Financial and Itau Unibanco go up and down completely randomly.

Pair Corralation between Truist Financial and Itau Unibanco

Assuming the 90 days trading horizon Truist Financial is expected to generate 0.37 times more return on investment than Itau Unibanco. However, Truist Financial is 2.7 times less risky than Itau Unibanco. It trades about 0.02 of its potential returns per unit of risk. Itau Unibanco Banco is currently generating about 0.0 per unit of risk. If you would invest  2,235  in Truist Financial on November 30, 2024 and sell it today you would earn a total of  7.00  from holding Truist Financial or generate 0.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Truist Financial  vs.  Itau Unibanco Banco

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-50
JavaScript chart by amCharts 3.21.15TFC-PO ITUB
       Timeline  
Truist Financial 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Truist Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Truist Financial is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb20.52121.52222.523
Itau Unibanco Banco 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Itau Unibanco Banco are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Itau Unibanco may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb55.25.45.65.866.2

Truist Financial and Itau Unibanco Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.36-2.52-1.67-0.830.00.831.682.533.37 0.050.100.150.200.250.300.35
JavaScript chart by amCharts 3.21.15TFC-PO ITUB
       Returns  

Pair Trading with Truist Financial and Itau Unibanco

The main advantage of trading using opposite Truist Financial and Itau Unibanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Itau 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 Itau Unibanco will offset losses from the drop in Itau Unibanco's long position.
The idea behind Truist Financial and Itau Unibanco Banco pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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