Correlation Between Washington Trust and Itau Unibanco
Can any of the company-specific risk be diversified away by investing in both Washington Trust 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 Washington Trust and Itau Unibanco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Trust Bancorp and Itau Unibanco Banco, you can compare the effects of market volatilities on Washington Trust 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 Washington Trust with a short position of Itau Unibanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Trust and Itau Unibanco.
Diversification Opportunities for Washington Trust and Itau Unibanco
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Washington and Itau is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Washington Trust Bancorp 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 Washington Trust 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 Washington Trust Bancorp 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 Washington Trust i.e., Washington Trust and Itau Unibanco go up and down completely randomly.
Pair Corralation between Washington Trust and Itau Unibanco
Given the investment horizon of 90 days Washington Trust Bancorp is expected to under-perform the Itau Unibanco. But the stock apears to be less risky and, when comparing its historical volatility, Washington Trust Bancorp is 1.14 times less risky than Itau Unibanco. The stock trades about -0.08 of its potential returns per unit of risk. The Itau Unibanco Banco is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 566.00 in Itau Unibanco Banco on November 30, 2024 and sell it today you would lose (2.00) from holding Itau Unibanco Banco or give up 0.35% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Washington Trust Bancorp vs. Itau Unibanco Banco
Performance |
Timeline |
Washington Trust Bancorp |
Itau Unibanco Banco |
Washington Trust and Itau Unibanco Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Washington Trust and Itau Unibanco
The main advantage of trading using opposite Washington Trust and Itau Unibanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Trust 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.Washington Trust vs. Univest Pennsylvania | ||
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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