Correlation Between Ambev SA and Jacobs Solutions
Can any of the company-specific risk be diversified away by investing in both Ambev SA and Jacobs Solutions 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 Jacobs Solutions 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 Jacobs Solutions, you can compare the effects of market volatilities on Ambev SA and Jacobs Solutions 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 Jacobs Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Jacobs Solutions.
Diversification Opportunities for Ambev SA and Jacobs Solutions
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ambev and Jacobs is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions 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 Jacobs Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacobs Solutions has no effect on the direction of Ambev SA i.e., Ambev SA and Jacobs Solutions go up and down completely randomly.
Pair Corralation between Ambev SA and Jacobs Solutions
Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the Jacobs Solutions. But the stock apears to be less risky and, when comparing its historical volatility, Ambev SA ADR is 1.67 times less risky than Jacobs Solutions. The stock trades about -0.1 of its potential returns per unit of risk. The Jacobs Solutions is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 14,058 in Jacobs Solutions on September 1, 2024 and sell it today you would earn a total of 65.00 from holding Jacobs Solutions or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambev SA ADR vs. Jacobs Solutions
Performance |
| Timeline |
| Ambev SA ADR |
| Jacobs Solutions |
Ambev SA and Jacobs Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and Jacobs Solutions
The main advantage of trading using opposite Ambev SA and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, Jacobs Solutions 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 Jacobs Solutions will offset losses from the drop in Jacobs Solutions' long position.| Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Boston Beer | Ambev SA vs. Carlsberg AS | Ambev SA vs. Compania Cervecerias Unidas |
| Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Fluor | Jacobs Solutions vs. Topbuild Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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