Correlation Between Itasa Investimentos and Ita Unibanco

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

By analyzing existing cross correlation between Itasa Investimentos and Ita Unibanco Holding, you can compare the effects of market volatilities on Itasa Investimentos 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 Itasa Investimentos with a short position of Ita Unibanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itasa Investimentos and Ita Unibanco.

Diversification Opportunities for Itasa Investimentos and Ita Unibanco

0.85

Correlation Coefficient

Itasa Investimentos  Ita Unibanco

Very poor diversification

The 3 months correlation between Itasa and Ita is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Itasa Investimentos 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 Itasa Investimentos 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 Itasa Investimentos 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 Itasa Investimentos i.e., Itasa Investimentos and Ita Unibanco go up and down completely randomly.

Pair Corralation between Itasa Investimentos and Ita Unibanco

Assuming the 90 days trading horizon Itasa Investimentos is expected to generate 1.72 times less return on investment than Ita Unibanco. But when comparing it to its historical volatility, Itasa Investimentos is 1.09 times less risky than Ita Unibanco. It trades about 0.11 of its potential returns per unit of risk. Ita Unibanco Holding is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,651  in Ita Unibanco Holding on December 30, 2024 and sell it today you would earn a total of  518.00  from holding Ita Unibanco Holding or generate 19.54% return on investment over 90 days.

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

Itasa Investimentos  vs.  Ita Unibanco Holding

Itasa Investimentos

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Itasa Investimentos are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Itasa Investimentos may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ita Unibanco Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ita Unibanco Holding are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ita Unibanco unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Itasa Investimentos and Ita Unibanco

The main advantage of trading using opposite Itasa Investimentos and Ita Unibanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itasa Investimentos 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.

The idea behind Itasa Investimentos and Ita Unibanco Holding 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.