Correlation Between Ambev SA and COVANTA
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By analyzing existing cross correlation between Ambev SA ADR and COVANTA HLDG P, you can compare the effects of market volatilities on Ambev SA and COVANTA 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 COVANTA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and COVANTA.
Diversification Opportunities for Ambev SA and COVANTA
Very weak diversification
The 3 months correlation between Ambev and COVANTA is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and COVANTA HLDG P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COVANTA HLDG P 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 COVANTA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COVANTA HLDG P has no effect on the direction of Ambev SA i.e., Ambev SA and COVANTA go up and down completely randomly.
Pair Corralation between Ambev SA and COVANTA
Given the investment horizon of 90 days Ambev SA ADR is expected to generate 0.41 times more return on investment than COVANTA. However, Ambev SA ADR is 2.46 times less risky than COVANTA. It trades about -0.1 of its potential returns per unit of risk. COVANTA HLDG P is currently generating about -0.2 per unit of risk. If you would invest 218.00 in Ambev SA ADR on September 1, 2024 and sell it today you would lose (6.00) from holding Ambev SA ADR or give up 2.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ambev SA ADR vs. COVANTA HLDG P
Performance |
| Timeline |
| Ambev SA ADR |
| COVANTA HLDG P |
Ambev SA and COVANTA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and COVANTA
The main advantage of trading using opposite Ambev SA and COVANTA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, COVANTA 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 COVANTA will offset losses from the drop in COVANTA's long position.| Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Boston Beer | Ambev SA vs. Carlsberg AS | Ambev SA vs. Compania Cervecerias Unidas |
| COVANTA vs. Westrock Coffee | COVANTA vs. Ambev SA ADR | COVANTA vs. Diageo PLC ADR | COVANTA vs. China Tontine Wines |
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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