Correlation Between IBI Inv and Itay Financial

Can any of the company-specific risk be diversified away by investing in both IBI Inv and Itay Financial 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 IBI Inv and Itay Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IBI Inv House and Itay Financial AA, you can compare the effects of market volatilities on IBI Inv and Itay Financial 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 IBI Inv with a short position of Itay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBI Inv and Itay Financial.

Diversification Opportunities for IBI Inv and Itay Financial

0.64

Correlation Coefficient

IBI Inv  Itay Financial

Poor diversification

The 3 months correlation between IBI and Itay is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding IBI Inv House and Itay Financial AA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itay Financial AA and IBI Inv 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 IBI Inv House are associated (or correlated) with Itay Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itay Financial AA has no effect on the direction of IBI Inv i.e., IBI Inv and Itay Financial go up and down completely randomly.

Pair Corralation between IBI Inv and Itay Financial

Assuming the 90 days trading horizon IBI Inv is expected to generate 5.15 times less return on investment than Itay Financial. But when comparing it to its historical volatility, IBI Inv House is 5.7 times less risky than Itay Financial. It trades about 0.15 of its potential returns per unit of risk. Itay Financial AA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  38,740  in Itay Financial AA on December 28, 2024 and sell it today you would earn a total of  30,020  from holding Itay Financial AA or generate 77.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

IBI Inv House  vs.  Itay Financial AA

IBI Inv House

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IBI Inv House are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, IBI Inv sustained solid returns over the last few months and may actually be approaching a breakup point.

Itay Financial AA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Itay Financial AA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Itay Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IBI Inv and Itay Financial

The main advantage of trading using opposite IBI Inv and Itay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBI Inv position performs unexpectedly, Itay Financial 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 Itay Financial will offset losses from the drop in Itay Financial's long position.

The idea behind IBI Inv House and Itay Financial AA 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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.