Correlation Between Embassy Bancorp and Itau Unibanco
Can any of the company-specific risk be diversified away by investing in both Embassy Bancorp and Itau Unibanco 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 Embassy Bancorp and Itau Unibanco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embassy Bancorp and Itau Unibanco Banco, you can compare the effects of market volatilities on Embassy Bancorp and Itau Unibanco 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 Embassy Bancorp with a short position of Itau Unibanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embassy Bancorp and Itau Unibanco.
Diversification Opportunities for Embassy Bancorp and Itau Unibanco
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Embassy and Itau is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Embassy Bancorp and Itau Unibanco Banco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itau Unibanco Banco and Embassy Bancorp 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 Embassy Bancorp are associated (or correlated) with Itau Unibanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itau Unibanco Banco has no effect on the direction of Embassy Bancorp i.e., Embassy Bancorp and Itau Unibanco go up and down completely randomly.
Pair Corralation between Embassy Bancorp and Itau Unibanco
Given the investment horizon of 90 days Embassy Bancorp is expected to generate 0.53 times more return on investment than Itau Unibanco. However, Embassy Bancorp is 1.89 times less risky than Itau Unibanco. It trades about -0.27 of its potential returns per unit of risk. Itau Unibanco Banco is currently generating about -0.34 per unit of risk. If you would invest 1,370 in Embassy Bancorp on January 20, 2024 and sell it today you would lose (70.00) from holding Embassy Bancorp or give up 5.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Embassy Bancorp vs. Itau Unibanco Banco
Performance |
| Timeline |
| Embassy Bancorp |
| Itau Unibanco Banco |
Embassy Bancorp and Itau Unibanco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embassy Bancorp and Itau Unibanco
The main advantage of trading using opposite Embassy Bancorp and Itau Unibanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embassy Bancorp position performs unexpectedly, Itau Unibanco 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 Itau Unibanco will offset losses from the drop in Itau Unibanco's long position.| Embassy Bancorp vs. Pfizer Inc | Embassy Bancorp vs. Heartland Financial USA | Embassy Bancorp vs. Conflux Network | Embassy Bancorp vs. Citigroup Capital XIII |
| Itau Unibanco vs. CrossFirst Bankshares | Itau Unibanco vs. Banco Bradesco SA | Itau Unibanco vs. CF Bankshares | Itau Unibanco vs. Foreign Trade Bank |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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