Correlation Between Ita Unibanco and MetLife

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

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

Diversification Opportunities for Ita Unibanco and MetLife

-0.76

Correlation Coefficient

Ita Unibanco  MetLife

Pay attention - limited upside

The 3 months correlation between Ita and MetLife is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ita Unibanco Holding and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Ita 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 Ita Unibanco Holding are associated (or correlated) with MetLife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife has no effect on the direction of Ita Unibanco i.e., Ita Unibanco and MetLife go up and down completely randomly.

Pair Corralation between Ita Unibanco and MetLife

Assuming the 90 days trading horizon Ita Unibanco Holding is expected to under-perform the MetLife. In addition to that, Ita Unibanco is 1.12 times more volatile than MetLife. It trades about -0.28 of its total potential returns per unit of risk. MetLife is currently generating about -0.05 per unit of volatility. If you would invest  50,400  in MetLife on September 27, 2024 and sell it today you would lose (861.00) from holding MetLife or give up 1.71% of portfolio value over 90 days.

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

Ita Unibanco Holding  vs.  MetLife

Ita Unibanco Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ita Unibanco Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

MetLife

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MetLife are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MetLife sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ita Unibanco and MetLife

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

The idea behind Ita Unibanco Holding and MetLife 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.