Correlation Between Ambev SA and Constellation Brands
Can any of the company-specific risk be diversified away by investing in both Ambev SA and Constellation Brands 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 Constellation Brands 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 Constellation Brands Class, you can compare the effects of market volatilities on Ambev SA and Constellation Brands 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 Constellation Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Constellation Brands.
Diversification Opportunities for Ambev SA and Constellation Brands
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ambev and Constellation is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Constellation Brands Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Brands 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 Constellation Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Brands has no effect on the direction of Ambev SA i.e., Ambev SA and Constellation Brands go up and down completely randomly.
Pair Corralation between Ambev SA and Constellation Brands
Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the Constellation Brands. In addition to that, Ambev SA is 1.15 times more volatile than Constellation Brands Class. It trades about -0.15 of its total potential returns per unit of risk. Constellation Brands Class is currently generating about 0.09 per unit of volatility. If you would invest 23,651 in Constellation Brands Class on August 28, 2024 and sell it today you would earn a total of 516.00 from holding Constellation Brands Class or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambev SA ADR vs. Constellation Brands Class
Performance |
| Timeline |
| Ambev SA ADR |
| Constellation Brands |
Ambev SA and Constellation Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and Constellation Brands
The main advantage of trading using opposite Ambev SA and Constellation Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, Constellation Brands 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 Constellation Brands will offset losses from the drop in Constellation Brands' long position.| Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Boston Beer | Ambev SA vs. Carlsberg AS | Ambev SA vs. Compania Cervecerias Unidas |
| Constellation Brands vs. Brown Forman | Constellation Brands vs. Duckhorn Portfolio | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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