Correlation Between Itau Unibanco and Erste Group
Can any of the company-specific risk be diversified away by investing in both Itau Unibanco and Erste Group 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 Itau Unibanco and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itau Unibanco Banco and Erste Group Bank, you can compare the effects of market volatilities on Itau Unibanco and Erste Group 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 Itau Unibanco with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itau Unibanco and Erste Group.
Diversification Opportunities for Itau Unibanco and Erste Group
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Itau and Erste is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Itau Unibanco Banco and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank and Itau 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 Itau Unibanco Banco are associated (or correlated) with Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of Itau Unibanco i.e., Itau Unibanco and Erste Group go up and down completely randomly.
Pair Corralation between Itau Unibanco and Erste Group
Given the investment horizon of 90 days Itau Unibanco Banco is expected to under-perform the Erste Group. In addition to that, Itau Unibanco is 1.14 times more volatile than Erste Group Bank. It trades about -0.06 of its total potential returns per unit of risk. Erste Group Bank is currently generating about 0.14 per unit of volatility. If you would invest 2,379 in Erste Group Bank on September 25, 2024 and sell it today you would earn a total of 698.00 from holding Erste Group Bank or generate 29.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Itau Unibanco Banco vs. Erste Group Bank
Performance |
Timeline |
Itau Unibanco Banco |
Erste Group Bank |
Itau Unibanco and Erste Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Itau Unibanco and Erste Group
The main advantage of trading using opposite Itau Unibanco and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itau Unibanco position performs unexpectedly, Erste Group 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 Erste Group will offset losses from the drop in Erste Group's long position.The idea behind Itau Unibanco Banco and Erste Group Bank 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.Erste Group vs. DBS Group Holdings | Erste Group vs. Swedbank AB | Erste Group vs. United Overseas Bank | Erste Group vs. Bank Mandiri Persero |
Check out your portfolio center.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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