Correlation Between Ambev SA and Ecolab
Can any of the company-specific risk be diversified away by investing in both Ambev SA and Ecolab 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 Ecolab 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 Ecolab Inc, you can compare the effects of market volatilities on Ambev SA and Ecolab 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 Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Ecolab.
Diversification Opportunities for Ambev SA and Ecolab
Very weak diversification
The 3 months correlation between Ambev and Ecolab is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc 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 Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of Ambev SA i.e., Ambev SA and Ecolab go up and down completely randomly.
Pair Corralation between Ambev SA and Ecolab
Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the Ecolab. In addition to that, Ambev SA is 1.29 times more volatile than Ecolab Inc. It trades about -0.06 of its total potential returns per unit of risk. Ecolab Inc is currently generating about 0.1 per unit of volatility. If you would invest 19,050 in Ecolab Inc on September 2, 2024 and sell it today you would earn a total of 5,827 from holding Ecolab Inc or generate 30.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambev SA ADR vs. Ecolab Inc
Performance |
| Timeline |
| Ambev SA ADR |
| Ecolab Inc |
Ambev SA and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and Ecolab
The main advantage of trading using opposite Ambev SA and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, Ecolab 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 Ecolab will offset losses from the drop in Ecolab'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 |
| Ecolab vs. Linde plc Ordinary | Ecolab vs. Air Products and | Ecolab vs. Aquagold International | Ecolab vs. Thrivent High Yield |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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