Correlation Between Itau Unibanco and Triad Business

Can any of the company-specific risk be diversified away by investing in both Itau Unibanco and Triad Business 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 Triad Business 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 Triad Business Bank, you can compare the effects of market volatilities on Itau Unibanco and Triad Business 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 Triad Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itau Unibanco and Triad Business.

Diversification Opportunities for Itau Unibanco and Triad Business

0.43

Correlation Coefficient

Itau Unibanco  Triad Business

Very weak diversification

The 3 months correlation between Itau and Triad is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Itau Unibanco Banco and Triad Business Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triad Business Bank 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 Triad Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triad Business Bank has no effect on the direction of Itau Unibanco i.e., Itau Unibanco and Triad Business go up and down completely randomly.

Pair Corralation between Itau Unibanco and Triad Business

Given the investment horizon of 90 days Itau Unibanco Banco is expected to generate 0.88 times more return on investment than Triad Business. However, Itau Unibanco Banco is 1.13 times less risky than Triad Business. It trades about 0.02 of its potential returns per unit of risk. Triad Business Bank is currently generating about -0.05 per unit of risk. If you would invest  437.00  in Itau Unibanco Banco on October 15, 2024 and sell it today you would earn a total of  67.00  from holding Itau Unibanco Banco or generate 15.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

Itau Unibanco Banco  vs.  Triad Business Bank

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.

Triad Business Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triad Business Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Triad Business is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Itau Unibanco and Triad Business

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

The idea behind Itau Unibanco Banco and Triad Business Bank 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.