Correlation Between Ita Unibanco and Pettenati

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

Diversification Opportunities for Ita Unibanco and Pettenati

0.73

Correlation Coefficient

Ita Unibanco  Pettenati

Poor diversification

The 3 months correlation between Ita and Pettenati is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ita Unibanco Holding and Pettenati SA Industria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pettenati SA Industria 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 Pettenati. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pettenati SA Industria has no effect on the direction of Ita Unibanco i.e., Ita Unibanco and Pettenati go up and down completely randomly.

Pair Corralation between Ita Unibanco and Pettenati

Assuming the 90 days trading horizon Ita Unibanco Holding is expected to generate 0.51 times more return on investment than Pettenati. However, Ita Unibanco Holding is 1.97 times less risky than Pettenati. It trades about 0.08 of its potential returns per unit of risk. Pettenati SA Industria is currently generating about 0.01 per unit of risk. If you would invest  1,687  in Ita Unibanco Holding on September 24, 2024 and sell it today you would earn a total of  1,067  from holding Ita Unibanco Holding or generate 63.25% return on investment over 90 days.

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

Ita Unibanco Holding  vs.  Pettenati SA Industria

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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pettenati SA Industria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pettenati SA Industria has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

Pair Trading with Ita Unibanco and Pettenati

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

The idea behind Ita Unibanco Holding and Pettenati SA Industria 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.