Correlation Between Itau Unibanco and Greenville Federal

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

By analyzing existing cross correlation between Itau Unibanco Banco and Greenville Federal Financial, you can compare the effects of market volatilities on Itau Unibanco and Greenville Federal 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 Itau Unibanco with a short position of Greenville Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itau Unibanco and Greenville Federal.

Diversification Opportunities for Itau Unibanco and Greenville Federal

0.54

Correlation Coefficient

Itau Unibanco  Greenville Federal

Very weak diversification

The 3 months correlation between Itau and Greenville is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Itau Unibanco Banco and Greenville Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenville Federal and Itau Unibanco 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 Itau Unibanco Banco are associated (or correlated) with Greenville Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenville Federal has no effect on the direction of Itau Unibanco i.e., Itau Unibanco and Greenville Federal go up and down completely randomly.

Pair Corralation between Itau Unibanco and Greenville Federal

Given the investment horizon of 90 days Itau Unibanco Banco is expected to under-perform the Greenville Federal. But the stock apears to be less risky and, when comparing its historical volatility, Itau Unibanco Banco is 1.86 times less risky than Greenville Federal. The stock trades about 0.0 of its potential returns per unit of risk. The Greenville Federal Financial is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  770.00  in Greenville Federal Financial on October 4, 2024 and sell it today you would lose (55.00) from holding Greenville Federal Financial or give up 7.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.47%
Values	Daily Returns

Itau Unibanco Banco  vs.  Greenville Federal Financial

Itau Unibanco Banco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Itau Unibanco Banco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Greenville Federal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenville Federal Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Greenville Federal is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Itau Unibanco and Greenville Federal

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

The idea behind Itau Unibanco Banco and Greenville Federal Financial 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.