Correlation Between Banco Ita and AstraZeneca PLC

Can any of the company-specific risk be diversified away by investing in both Banco Ita and AstraZeneca PLC 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 Banco Ita and AstraZeneca PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banco Ita Chile and AstraZeneca PLC ADR, you can compare the effects of market volatilities on Banco Ita and AstraZeneca PLC 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 Banco Ita with a short position of AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Ita and AstraZeneca PLC.

Diversification Opportunities for Banco Ita and AstraZeneca PLC

0.0

Correlation Coefficient

Banco Ita  AstraZeneca PLC

Pay attention - limited upside

The 3 months correlation between Banco and AstraZeneca is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Banco Ita Chile and AstraZeneca PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC ADR and Banco Ita 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 Banco Ita Chile are associated (or correlated) with AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC ADR has no effect on the direction of Banco Ita i.e., Banco Ita and AstraZeneca PLC go up and down completely randomly.

Pair Corralation between Banco Ita and AstraZeneca PLC

If you would invest  6,466  in AstraZeneca PLC ADR on December 29, 2024 and sell it today you would earn a total of  913.00  from holding AstraZeneca PLC ADR or generate 14.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Banco Ita Chile  vs.  AstraZeneca PLC ADR

Banco Ita Chile

Risk-Adjusted Performance

Very Weak

Over the last 90 days Banco Ita Chile has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Banco Ita is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

AstraZeneca PLC ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AstraZeneca PLC ADR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, AstraZeneca PLC displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banco Ita and AstraZeneca PLC

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

The idea behind Banco Ita Chile and AstraZeneca PLC ADR 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.