Correlation Between Itasa Investimentos and Mercantil

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

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

Diversification Opportunities for Itasa Investimentos and Mercantil

0.0

Correlation Coefficient

Itasa Investimentos  Mercantil

Pay attention - limited upside

The 3 months correlation between Itasa and Mercantil is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Itasa Investimentos and Mercantil do Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercantil do Brasil and Itasa Investimentos 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 Itasa Investimentos are associated (or correlated) with Mercantil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercantil do Brasil has no effect on the direction of Itasa Investimentos i.e., Itasa Investimentos and Mercantil go up and down completely randomly.

Pair Corralation between Itasa Investimentos and Mercantil

If you would invest  0.00  in Mercantil do Brasil on March 14, 2024 and sell it today you would earn a total of  0.00  from holding Mercantil do Brasil or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

Itasa Investimentos  vs.  Mercantil do Brasil

Itasa Investimentos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Itasa Investimentos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Mercantil do Brasil

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Itasa Investimentos and Mercantil

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

The idea behind Itasa Investimentos and Mercantil do Brasil 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..