Correlation Between Ambev SA and Digi International
Can any of the company-specific risk be diversified away by investing in both Ambev SA and Digi International 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 Digi International 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 Digi International, you can compare the effects of market volatilities on Ambev SA and Digi International 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 Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Digi International.
Diversification Opportunities for Ambev SA and Digi International
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ambev and Digi is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International 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 Digi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digi International has no effect on the direction of Ambev SA i.e., Ambev SA and Digi International go up and down completely randomly.
Pair Corralation between Ambev SA and Digi International
Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the Digi International. But the stock apears to be less risky and, when comparing its historical volatility, Ambev SA ADR is 1.92 times less risky than Digi International. The stock trades about -0.12 of its potential returns per unit of risk. The Digi International is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,051 in Digi International on August 29, 2024 and sell it today you would earn a total of 213.00 from holding Digi International or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambev SA ADR vs. Digi International
Performance |
| Timeline |
| Ambev SA ADR |
| Digi International |
Ambev SA and Digi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and Digi International
The main advantage of trading using opposite Ambev SA and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, Digi International 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 Digi International will offset losses from the drop in Digi International's long position.| Ambev SA vs. Budweiser Brewing | Ambev SA vs. Anheuser Busch InBev SANV | Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Anheuser Busch Inbev |
| Digi International vs. Ichor Holdings | Digi International vs. Fabrinet | Digi International vs. Hello Group | Digi International vs. Ultra Clean Holdings |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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