Correlation Between Ambev SA and TFI International
Can any of the company-specific risk be diversified away by investing in both Ambev SA and TFI International 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 TFI International 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 TFI International, you can compare the effects of market volatilities on Ambev SA and TFI International 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 TFI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and TFI International.
Diversification Opportunities for Ambev SA and TFI International
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ambev and TFI is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International 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 TFI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFI International has no effect on the direction of Ambev SA i.e., Ambev SA and TFI International go up and down completely randomly.
Pair Corralation between Ambev SA and TFI International
Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the TFI International. But the stock apears to be less risky and, when comparing its historical volatility, Ambev SA ADR is 1.22 times less risky than TFI International. The stock trades about -0.02 of its potential returns per unit of risk. The TFI International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10,146 in TFI International on August 29, 2024 and sell it today you would earn a total of 4,777 from holding TFI International or generate 47.08% 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. TFI International
Performance |
| Timeline |
| Ambev SA ADR |
| TFI International |
Ambev SA and TFI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and TFI International
The main advantage of trading using opposite Ambev SA and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, TFI International 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 TFI International will offset losses from the drop in TFI International's long position.| Ambev SA vs. Budweiser Brewing | Ambev SA vs. Anheuser Busch InBev SANV | Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Anheuser Busch Inbev |
| TFI International vs. Old Dominion Freight | TFI International vs. ArcBest Corp | TFI International vs. Marten Transport | TFI International vs. Werner Enterprises |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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