Correlation Between Banco Do and Itasa Investimentos

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

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

Diversification Opportunities for Banco Do and Itasa Investimentos

0.74

Correlation Coefficient

Banco Do  Itasa Investimentos

Poor diversification

The 3 months correlation between Banco and Itasa is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Banco do Estado and Itasa Investimentos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itasa Investimentos and Banco Do 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 Banco do Estado are associated (or correlated) with Itasa Investimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itasa Investimentos has no effect on the direction of Banco Do i.e., Banco Do and Itasa Investimentos go up and down completely randomly.

Pair Corralation between Banco Do and Itasa Investimentos

Assuming the 90 days trading horizon Banco Do is expected to generate 4.99 times less return on investment than Itasa Investimentos. In addition to that, Banco Do is 1.28 times more volatile than Itasa Investimentos. It trades about 0.01 of its total potential returns per unit of risk. Itasa Investimentos is currently generating about 0.04 per unit of volatility. If you would invest  1,008  in Itasa Investimentos on April 20, 2025 and sell it today you would earn a total of  33.00  from holding Itasa Investimentos or generate 3.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Banco do Estado  vs.  Itasa Investimentos

Banco do Estado

Risk-Adjusted Performance

Very Weak

Over the last 90 days Banco do Estado has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Banco Do is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Itasa Investimentos

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Itasa Investimentos are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Itasa Investimentos is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Banco Do and Itasa Investimentos

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

The idea behind Banco do Estado and Itasa Investimentos 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.