Correlation Between Itasa Investimentos and BRB Banco

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

By analyzing existing cross correlation between Itasa Investimentos and BRB Banco de, you can compare the effects of market volatilities on Itasa Investimentos and BRB Banco 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 Itasa Investimentos with a short position of BRB Banco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itasa Investimentos and BRB Banco.

Diversification Opportunities for Itasa Investimentos and BRB Banco

0.73

Correlation Coefficient

Itasa Investimentos  BRB Banco

Poor diversification

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

Pair Corralation between Itasa Investimentos and BRB Banco

Assuming the 90 days trading horizon Itasa Investimentos is expected to generate 0.61 times more return on investment than BRB Banco. However, Itasa Investimentos is 1.65 times less risky than BRB Banco. It trades about -0.17 of its potential returns per unit of risk. BRB Banco de is currently generating about -0.18 per unit of risk. If you would invest  1,119  in Itasa Investimentos on September 4, 2024 and sell it today you would lose (147.00) from holding Itasa Investimentos or give up 13.14% of portfolio value over 90 days.

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

Itasa Investimentos  vs.  BRB Banco de

Itasa Investimentos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Itasa Investimentos 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.

BRB Banco de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRB Banco de 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 Itasa Investimentos and BRB Banco

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

The idea behind Itasa Investimentos and BRB Banco de 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..