Correlation Between Ambev SA and CDW Corp
Can any of the company-specific risk be diversified away by investing in both Ambev SA and CDW Corp 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 Ambev SA and CDW Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambev SA ADR and CDW Corp, you can compare the effects of market volatilities on Ambev SA and CDW Corp 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 Ambev SA with a short position of CDW Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and CDW Corp.
Diversification Opportunities for Ambev SA and CDW Corp
Poor diversification
The 3 months correlation between Ambev and CDW is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and CDW Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corp and Ambev SA 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 Ambev SA ADR are associated (or correlated) with CDW Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDW Corp has no effect on the direction of Ambev SA i.e., Ambev SA and CDW Corp go up and down completely randomly.
Pair Corralation between Ambev SA and CDW Corp
Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the CDW Corp. But the stock apears to be less risky and, when comparing its historical volatility, Ambev SA ADR is 1.04 times less risky than CDW Corp. The stock trades about -0.02 of its potential returns per unit of risk. The CDW Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 18,522 in CDW Corp on September 2, 2024 and sell it today you would lose (929.00) from holding CDW Corp or give up 5.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambev SA ADR vs. CDW Corp
Performance |
| Timeline |
| Ambev SA ADR |
| CDW Corp |
Ambev SA and CDW Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and CDW Corp
The main advantage of trading using opposite Ambev SA and CDW Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, CDW Corp 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 CDW Corp will offset losses from the drop in CDW Corp's long position.| Ambev SA vs. Compania Cervecerias Unidas | Ambev SA vs. Molson Coors Brewing | Ambev SA vs. Suntory Beverage Food | Ambev SA vs. Carlsberg AS |
| CDW Corp vs. Knowles Cor | CDW Corp vs. Ubiquiti Networks | CDW Corp vs. AmpliTech Group | CDW Corp vs. Viavi Solutions |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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