Correlation Between Ambev SA and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Ambev SA and Ross Stores 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 Ross Stores 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 Ross Stores, you can compare the effects of market volatilities on Ambev SA and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Ross Stores.
Diversification Opportunities for Ambev SA and Ross Stores
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ambev and Ross is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Ambev SA i.e., Ambev SA and Ross Stores go up and down completely randomly.
Pair Corralation between Ambev SA and Ross Stores
Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the Ross Stores. In addition to that, Ambev SA is 1.0 times more volatile than Ross Stores. It trades about -0.06 of its total potential returns per unit of risk. Ross Stores is currently generating about 0.08 per unit of volatility. If you would invest 13,182 in Ross Stores on September 3, 2024 and sell it today you would earn a total of 2,305 from holding Ross Stores or generate 17.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambev SA ADR vs. Ross Stores
Performance |
| Timeline |
| Ambev SA ADR |
| Ross Stores |
Ambev SA and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and Ross Stores
The main advantage of trading using opposite Ambev SA and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Boston Beer | Ambev SA vs. Carlsberg AS | Ambev SA vs. Compania Cervecerias Unidas |
| Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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