Correlation Between Ambev SA and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Ambev SA and Ross Stores 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 Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambev SA and Ross Stores, you can compare the effects of market volatilities on Ambev SA and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Ross Stores.
Diversification Opportunities for Ambev SA and Ross Stores
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ambev and Ross is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Ambev SA i.e., Ambev SA and Ross Stores go up and down completely randomly.
Pair Corralation between Ambev SA and Ross Stores
Assuming the 90 days trading horizon Ambev SA is expected to generate 4.78 times less return on investment than Ross Stores. But when comparing it to its historical volatility, Ambev SA is 1.28 times less risky than Ross Stores. It trades about 0.14 of its potential returns per unit of risk. Ross Stores is currently generating about 0.53 of returns per unit of risk over similar time horizon. If you would invest 279,764 in Ross Stores on September 5, 2024 and sell it today you would earn a total of 28,736 from holding Ross Stores or generate 10.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 36.36% |
| Values | Daily Returns |
Ambev SA vs. Ross Stores
Performance |
| Timeline |
| Ambev SA |
| Ross Stores |
Ambev SA and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and Ross Stores
The main advantage of trading using opposite Ambev SA and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| Ambev SA vs. Ross Stores | Ambev SA vs. Monster Beverage Corp | Ambev SA vs. GMxico Transportes SAB | Ambev SA vs. DXC Technology |
| Ross Stores vs. Southern Copper | Ross Stores vs. McEwen Mining | Ross Stores vs. Costco Wholesale | Ross Stores vs. United Airlines Holdings |
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.
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