Correlation Between Infosys and Itau Unibanco

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

By analyzing existing cross correlation between Infosys Ltd ADR and Itau Unibanco Banco, you can compare the effects of market volatilities on Infosys 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 Infosys with a short position of Itau Unibanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and Itau Unibanco.

Diversification Opportunities for Infosys and Itau Unibanco

0.89

Correlation Coefficient

Infosys  Itau Unibanco

Very poor diversification

The 3 months correlation between Infosys and Itau is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR 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 Infosys 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 Infosys Ltd ADR 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 Infosys i.e., Infosys and Itau Unibanco go up and down completely randomly.

Pair Corralation between Infosys and Itau Unibanco

Given the investment horizon of 90 days Infosys Ltd ADR is expected to generate 0.93 times more return on investment than Itau Unibanco. However, Infosys Ltd ADR is 1.08 times less risky than Itau Unibanco. It trades about 0.08 of its potential returns per unit of risk. Itau Unibanco Banco is currently generating about 0.07 per unit of risk. If you would invest  1,699  in Infosys Ltd ADR on April 23, 2025 and sell it today you would earn a total of  120.00  from holding Infosys Ltd ADR or generate 7.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Infosys Ltd ADR  vs.  Itau Unibanco Banco

Infosys Ltd ADR

Risk-Adjusted Performance

OK

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

Itau Unibanco Banco

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Itau Unibanco Banco are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Itau Unibanco may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Infosys and Itau Unibanco

The main advantage of trading using opposite Infosys and Itau Unibanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infosys 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.

The idea behind Infosys Ltd ADR and Itau Unibanco Banco 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.