Correlation Between Ita Unibanco and KeyCorp

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

Diversification Opportunities for Ita Unibanco and KeyCorp

-0.8

Correlation Coefficient

Ita Unibanco  KeyCorp

Pay attention - limited upside

The 3 months correlation between Ita and KeyCorp is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ita Unibanco Holding and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Ita Unibanco i.e., Ita Unibanco and KeyCorp go up and down completely randomly.

Pair Corralation between Ita Unibanco and KeyCorp

Assuming the 90 days trading horizon Ita Unibanco Holding is expected to under-perform the KeyCorp. In addition to that, Ita Unibanco is 1.04 times more volatile than KeyCorp. It trades about -0.24 of its total potential returns per unit of risk. KeyCorp is currently generating about -0.15 per unit of volatility. If you would invest  11,314  in KeyCorp on September 25, 2024 and sell it today you would lose (644.00) from holding KeyCorp or give up 5.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Ita Unibanco Holding  vs.  KeyCorp

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

KeyCorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, KeyCorp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ita Unibanco and KeyCorp

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

The idea behind Ita Unibanco Holding and KeyCorp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.