Correlation Between Banco Ita and Thales SA

Can any of the company-specific risk be diversified away by investing in both Banco Ita and Thales SA 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 Thales SA 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 Thales SA ADR, you can compare the effects of market volatilities on Banco Ita and Thales SA 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 Thales SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Ita and Thales SA.

Diversification Opportunities for Banco Ita and Thales SA

-0.49

Correlation Coefficient

Banco Ita  Thales SA

Very good diversification

The 3 months correlation between Banco and Thales is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Banco Ita Chile and Thales SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales SA 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 Thales SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thales SA ADR has no effect on the direction of Banco Ita i.e., Banco Ita and Thales SA go up and down completely randomly.

Pair Corralation between Banco Ita and Thales SA

If you would invest  377.00  in Banco Ita Chile on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Banco Ita Chile or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Banco Ita Chile  vs.  Thales SA ADR

Banco Ita Chile

Risk-Adjusted Performance

0 of 100

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 latest stock price mess, may contribute to short-term losses for the institutional investors.

Thales SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thales SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Banco Ita and Thales SA

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

The idea behind Banco Ita Chile and Thales SA 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.