Correlation Between Ita Unibanco and ITUB4F

Can any of the company-specific risk be diversified away by investing in both Ita Unibanco and ITUB4F 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 ITUB4F 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 ITUB4F, you can compare the effects of market volatilities on Ita Unibanco and ITUB4F 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 ITUB4F. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ita Unibanco and ITUB4F.

Diversification Opportunities for Ita Unibanco and ITUB4F

0.92

Correlation Coefficient

Ita Unibanco  ITUB4F

Almost no diversification

The 3 months correlation between Ita and ITUB4F is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Ita Unibanco Holding and ITUB4F in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITUB4F 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 ITUB4F. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITUB4F has no effect on the direction of Ita Unibanco i.e., Ita Unibanco and ITUB4F go up and down completely randomly.

Pair Corralation between Ita Unibanco and ITUB4F

Assuming the 90 days trading horizon Ita Unibanco Holding is expected to generate 0.86 times more return on investment than ITUB4F. However, Ita Unibanco Holding is 1.17 times less risky than ITUB4F. It trades about 0.03 of its potential returns per unit of risk. ITUB4F is currently generating about 0.02 per unit of risk. If you would invest  3,438  in Ita Unibanco Holding on April 24, 2025 and sell it today you would earn a total of  62.00  from holding Ita Unibanco Holding or generate 1.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	96.77%
Values	Daily Returns

Ita Unibanco Holding  vs.  ITUB4F

Ita Unibanco Holding

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ita Unibanco Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ita Unibanco is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ITUB4F

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ITUB4F are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ITUB4F is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ita Unibanco and ITUB4F

The main advantage of trading using opposite Ita Unibanco and ITUB4F positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ita Unibanco position performs unexpectedly, ITUB4F 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 ITUB4F will offset losses from the drop in ITUB4F's long position.

The idea behind Ita Unibanco Holding and ITUB4F 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.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.