Correlation Between Ita Unibanco and Trisul SA

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

Diversification Opportunities for Ita Unibanco and Trisul SA

0.85

Correlation Coefficient

Ita Unibanco  Trisul SA

Very poor diversification

The 3 months correlation between Ita and Trisul is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ita Unibanco Holding and Trisul SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trisul SA 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 Trisul SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trisul SA has no effect on the direction of Ita Unibanco i.e., Ita Unibanco and Trisul SA go up and down completely randomly.

Pair Corralation between Ita Unibanco and Trisul SA

Assuming the 90 days trading horizon Ita Unibanco is expected to generate 2.01 times less return on investment than Trisul SA. But when comparing it to its historical volatility, Ita Unibanco Holding is 1.26 times less risky than Trisul SA. It trades about 0.21 of its potential returns per unit of risk. Trisul SA is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  434.00  in Trisul SA on December 21, 2024 and sell it today you would earn a total of  223.00  from holding Trisul SA or generate 51.38% return on investment over 90 days.

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

Ita Unibanco Holding  vs.  Trisul SA

Ita Unibanco Holding

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ita Unibanco Holding are ranked lower than 16 (%) 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.

Trisul SA

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Trisul SA are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Trisul SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ita Unibanco and Trisul SA

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

The idea behind Ita Unibanco Holding and Trisul SA 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.