Correlation Between Ambev SA and Xponential Fitness
Can any of the company-specific risk be diversified away by investing in both Ambev SA and Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness, you can compare the effects of market volatilities on Ambev SA and Xponential Fitness 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 Xponential Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Xponential Fitness.
Diversification Opportunities for Ambev SA and Xponential Fitness
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ambev and Xponential is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness 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 Xponential Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xponential Fitness has no effect on the direction of Ambev SA i.e., Ambev SA and Xponential Fitness go up and down completely randomly.
Pair Corralation between Ambev SA and Xponential Fitness
Given the investment horizon of 90 days Ambev SA ADR is expected to generate 0.75 times more return on investment than Xponential Fitness. However, Ambev SA ADR is 1.33 times less risky than Xponential Fitness. It trades about -0.03 of its potential returns per unit of risk. Xponential Fitness is currently generating about -0.14 per unit of risk. If you would invest 222.00 in Ambev SA ADR on September 14, 2024 and sell it today you would lose (4.00) from holding Ambev SA ADR or give up 1.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambev SA ADR vs. Xponential Fitness
Performance |
| Timeline |
| Ambev SA ADR |
| Xponential Fitness |
Ambev SA and Xponential Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and Xponential Fitness
The main advantage of trading using opposite Ambev SA and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, Xponential Fitness 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 Xponential Fitness will offset losses from the drop in Xponential Fitness' long position.| Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Carlsberg AS | Ambev SA vs. Compania Cervecerias Unidas | Ambev SA vs. Molson Coors Beverage |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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