Correlation Between Vale SA and Ita Unibanco
Can any of the company-specific risk be diversified away by investing in both Vale SA 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 Vale SA and Ita Unibanco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale SA and Ita Unibanco Holding, you can compare the effects of market volatilities on Vale SA 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 Vale SA with a short position of Ita Unibanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and Ita Unibanco.
Diversification Opportunities for Vale SA and Ita Unibanco
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vale and Ita is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Vale 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 Vale SA 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 Vale 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 Vale SA i.e., Vale SA and Ita Unibanco go up and down completely randomly.
Pair Corralation between Vale SA and Ita Unibanco
Assuming the 90 days trading horizon Vale SA is expected to under-perform the Ita Unibanco. In addition to that, Vale SA is 1.54 times more volatile than Ita Unibanco Holding. It trades about -0.01 of its total potential returns per unit of risk. Ita Unibanco Holding is currently generating about 0.07 per unit of volatility. If you would invest 2,256 in Ita Unibanco Holding on August 23, 2024 and sell it today you would earn a total of 1,145 from holding Ita Unibanco Holding or generate 50.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Vale SA vs. Ita Unibanco Holding
Performance |
| Timeline |
| Vale SA |
| Ita Unibanco Holding |
Vale SA and Ita Unibanco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale SA and Ita Unibanco
The main advantage of trading using opposite Vale SA and Ita Unibanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA 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.| Vale SA vs. Marcopolo SA | Vale SA vs. Randon SA Implementos | Vale SA vs. Companhia Siderrgica Nacional | Vale SA vs. Positivo Tecnologia 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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