Correlation Between Itau Unibanco and FS Bancorp

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

Diversification Opportunities for Itau Unibanco and FS Bancorp

-0.91

Correlation Coefficient

Itau Unibanco  FS Bancorp

Pay attention - limited upside

The 3 months correlation between Itau and FXLG is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Itau Unibanco Banco and FS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Bancorp 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 FS Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Bancorp has no effect on the direction of Itau Unibanco i.e., Itau Unibanco and FS Bancorp go up and down completely randomly.

Pair Corralation between Itau Unibanco and FS Bancorp

Given the investment horizon of 90 days Itau Unibanco is expected to generate 1.21 times less return on investment than FS Bancorp. But when comparing it to its historical volatility, Itau Unibanco Banco is 1.59 times less risky than FS Bancorp. It trades about 0.02 of its potential returns per unit of risk. FS Bancorp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,053  in FS Bancorp on September 29, 2024 and sell it today you would earn a total of  127.00  from holding FS Bancorp or generate 4.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	75.4%
Values	Daily Returns

Itau Unibanco Banco  vs.  FS Bancorp

Itau Unibanco Banco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Itau Unibanco Banco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

FS Bancorp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FS Bancorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, FS Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Itau Unibanco and FS Bancorp

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

The idea behind Itau Unibanco Banco and FS Bancorp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.