Correlation Between Ita Unibanco and Alaska Air

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

Diversification Opportunities for Ita Unibanco and Alaska Air

-0.87

Correlation Coefficient

Ita Unibanco  Alaska Air

Pay attention - limited upside

The 3 months correlation between Ita and Alaska is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ita Unibanco Holding and Alaska Air Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group, 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 Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group, has no effect on the direction of Ita Unibanco i.e., Ita Unibanco and Alaska Air go up and down completely randomly.

Pair Corralation between Ita Unibanco and Alaska Air

Assuming the 90 days trading horizon Ita Unibanco Holding is expected to under-perform the Alaska Air. But the preferred stock apears to be less risky and, when comparing its historical volatility, Ita Unibanco Holding is 3.85 times less risky than Alaska Air. The preferred stock trades about -0.35 of its potential returns per unit of risk. The Alaska Air Group, is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  25,948  in Alaska Air Group, on October 6, 2024 and sell it today you would earn a total of  13,752  from holding Alaska Air Group, or generate 53.0% return on investment over 90 days.

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

Ita Unibanco Holding  vs.  Alaska Air Group,

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 uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Alaska Air Group,

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group, are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Alaska Air sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ita Unibanco and Alaska Air

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

The idea behind Ita Unibanco Holding and Alaska Air Group, 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.