Correlation Between Ita Unibanco and M Dias

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

Diversification Opportunities for Ita Unibanco and M Dias

-0.4

Correlation Coefficient

Ita Unibanco  M Dias

Very good diversification

The 3 months correlation between Ita and MDIA3 is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ita Unibanco Holding and M Dias Branco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Dias Branco 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 M Dias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Dias Branco has no effect on the direction of Ita Unibanco i.e., Ita Unibanco and M Dias go up and down completely randomly.

Pair Corralation between Ita Unibanco and M Dias

Assuming the 90 days trading horizon Ita Unibanco Holding is expected to generate 0.71 times more return on investment than M Dias. However, Ita Unibanco Holding is 1.41 times less risky than M Dias. It trades about 0.08 of its potential returns per unit of risk. M Dias Branco is currently generating about 0.0 per unit of risk. If you would invest  3,304  in Ita Unibanco Holding on April 22, 2025 and sell it today you would earn a total of  203.00  from holding Ita Unibanco Holding or generate 6.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ita Unibanco Holding  vs.  M Dias Branco

Ita Unibanco Holding

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ita Unibanco Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ita Unibanco may actually be approaching a critical reversion point that can send shares even higher in August 2025.

M Dias Branco

Risk-Adjusted Performance

Very Weak

Over the last 90 days M Dias Branco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, M Dias 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 Ita Unibanco and M Dias

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

The idea behind Ita Unibanco Holding and M Dias Branco 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.