Correlation Between Ambev SA and Enlight Renewable
Can any of the company-specific risk be diversified away by investing in both Ambev SA and Enlight Renewable 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 Enlight Renewable 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 Enlight Renewable Energy, you can compare the effects of market volatilities on Ambev SA and Enlight Renewable 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 Enlight Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Enlight Renewable.
Diversification Opportunities for Ambev SA and Enlight Renewable
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ambev and Enlight is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Enlight Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlight Renewable Energy 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 Enlight Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlight Renewable Energy has no effect on the direction of Ambev SA i.e., Ambev SA and Enlight Renewable go up and down completely randomly.
Pair Corralation between Ambev SA and Enlight Renewable
Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the Enlight Renewable. But the stock apears to be less risky and, when comparing its historical volatility, Ambev SA ADR is 1.47 times less risky than Enlight Renewable. The stock trades about -0.06 of its potential returns per unit of risk. The Enlight Renewable Energy is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,725 in Enlight Renewable Energy on November 8, 2024 and sell it today you would lose (15.00) from holding Enlight Renewable Energy or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambev SA ADR vs. Enlight Renewable Energy
Performance |
| Timeline |
| Ambev SA ADR |
| Enlight Renewable Energy |
Ambev SA and Enlight Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and Enlight Renewable
The main advantage of trading using opposite Ambev SA and Enlight Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, Enlight Renewable 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 Enlight Renewable will offset losses from the drop in Enlight Renewable's long position.| Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Boston Beer | Ambev SA vs. Carlsberg AS | Ambev SA vs. Compania Cervecerias Unidas |
| Enlight Renewable vs. Albertsons Companies | Enlight Renewable vs. RH | Enlight Renewable vs. MOGU Inc | Enlight Renewable vs. Sligro Food Group |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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