Correlation Between Ambev SA and First Majestic
Can any of the company-specific risk be diversified away by investing in both Ambev SA and First Majestic 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 First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambev SA and First Majestic Silver, you can compare the effects of market volatilities on Ambev SA and First Majestic 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 First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and First Majestic.
Diversification Opportunities for Ambev SA and First Majestic
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ambev and First is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver 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 are associated (or correlated) with First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of Ambev SA i.e., Ambev SA and First Majestic go up and down completely randomly.
Pair Corralation between Ambev SA and First Majestic
Assuming the 90 days trading horizon Ambev SA is expected to generate 1.95 times more return on investment than First Majestic. However, Ambev SA is 1.95 times more volatile than First Majestic Silver. It trades about -0.01 of its potential returns per unit of risk. First Majestic Silver is currently generating about -0.37 per unit of risk. If you would invest 4,405 in Ambev SA on September 2, 2024 and sell it today you would lose (25.00) from holding Ambev SA or give up 0.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambev SA vs. First Majestic Silver
Performance |
| Timeline |
| Ambev SA |
| First Majestic Silver |
Ambev SA and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and First Majestic
The main advantage of trading using opposite Ambev SA and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, First Majestic 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 First Majestic will offset losses from the drop in First Majestic's long position.| Ambev SA vs. First Majestic Silver | Ambev SA vs. McEwen Mining | Ambev SA vs. Grupo Hotelero Santa | Ambev SA vs. Costco Wholesale |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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