Correlation Between Banco Latinoamericano and BankUnited

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Can any of the company-specific risk be diversified away by investing in both Banco Latinoamericano and BankUnited 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 Banco Latinoamericano and BankUnited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Latinoamericano DE and BankUnited, you can compare the effects of market volatilities on Banco Latinoamericano and BankUnited 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 Banco Latinoamericano with a short position of BankUnited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Latinoamericano and BankUnited.

Diversification Opportunities for Banco Latinoamericano and BankUnited

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Banco and BankUnited is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Banco Latinoamericano DE and BankUnited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankUnited and Banco Latinoamericano 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 Banco Latinoamericano DE are associated (or correlated) with BankUnited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankUnited has no effect on the direction of Banco Latinoamericano i.e., Banco Latinoamericano and BankUnited go up and down completely randomly.

Pair Corralation between Banco Latinoamericano and BankUnited

Considering the 90-day investment horizon Banco Latinoamericano DE is expected to under-perform the BankUnited. But the stock apears to be less risky and, when comparing its historical volatility, Banco Latinoamericano DE is 1.52 times less risky than BankUnited. The stock trades about -0.1 of its potential returns per unit of risk. The BankUnited is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  4,377  in BankUnited on April 4, 2022 and sell it today you would lose (756.00)  from holding BankUnited or give up 17.27% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Banco Latinoamericano DE  vs.  BankUnited

 Performance (%) 
      Timeline 
Banco Latinoamericano 
Banco Performance
0 of 100
Over the last 90 days Banco Latinoamericano DE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0754
Payout Ratio
0.6
Forward Annual Dividend Rate
1.0
Dividend Date
2022-06-01
Ex Dividend Date
2022-05-13

Banco Price Channel

BankUnited 
BankUnited Performance
0 of 100
Over the last 90 days BankUnited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in August 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0276
Payout Ratio
0.25
Forward Annual Dividend Rate
1.0
Dividend Date
2022-07-29
Ex Dividend Date
2022-07-13

BankUnited Price Channel

Banco Latinoamericano and BankUnited Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Banco Latinoamericano and BankUnited

The main advantage of trading using opposite Banco Latinoamericano and BankUnited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Latinoamericano position performs unexpectedly, BankUnited 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 BankUnited will offset losses from the drop in BankUnited's long position.
The idea behind Banco Latinoamericano DE and BankUnited 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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