Correlation Between Ambev SA and Sensient Technologies
Can any of the company-specific risk be diversified away by investing in both Ambev SA and Sensient Technologies 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 Sensient Technologies 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 Sensient Technologies, you can compare the effects of market volatilities on Ambev SA and Sensient Technologies 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 Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Sensient Technologies.
Diversification Opportunities for Ambev SA and Sensient Technologies
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ambev and Sensient is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies 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 Sensient Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensient Technologies has no effect on the direction of Ambev SA i.e., Ambev SA and Sensient Technologies go up and down completely randomly.
Pair Corralation between Ambev SA and Sensient Technologies
Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the Sensient Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Ambev SA ADR is 1.0 times less risky than Sensient Technologies. The stock trades about -0.06 of its potential returns per unit of risk. The Sensient Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,026 in Sensient Technologies on September 2, 2024 and sell it today you would earn a total of 1,738 from holding Sensient Technologies or generate 28.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambev SA ADR vs. Sensient Technologies
Performance |
| Timeline |
| Ambev SA ADR |
| Sensient Technologies |
Ambev SA and Sensient Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and Sensient Technologies
The main advantage of trading using opposite Ambev SA and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, Sensient Technologies 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 Sensient Technologies will offset losses from the drop in Sensient Technologies' 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 |
| Sensient Technologies vs. Innospec | Sensient Technologies vs. Minerals Technologies | Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |