Correlation Between Ambev SA and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Ambev SA and Merit Medical 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 Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambev SA and Merit Medical Systems, you can compare the effects of market volatilities on Ambev SA and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Merit Medical.
Diversification Opportunities for Ambev SA and Merit Medical
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ambev and Merit is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Ambev SA i.e., Ambev SA and Merit Medical go up and down completely randomly.
Pair Corralation between Ambev SA and Merit Medical
Assuming the 90 days trading horizon Ambev SA is expected to under-perform the Merit Medical. In addition to that, Ambev SA is 2.48 times more volatile than Merit Medical Systems. It trades about -0.35 of its total potential returns per unit of risk. Merit Medical Systems is currently generating about -0.32 per unit of volatility. If you would invest 9,800 in Merit Medical Systems on October 11, 2024 and sell it today you would lose (650.00) from holding Merit Medical Systems or give up 6.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Ambev SA vs. Merit Medical Systems
Performance |
| Timeline |
| Ambev SA |
| Merit Medical Systems |
Ambev SA and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and Merit Medical
The main advantage of trading using opposite Ambev SA and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| Ambev SA vs. Merit Medical Systems | Ambev SA vs. Lery Seafood Group | Ambev SA vs. Performance Food Group | Ambev SA vs. PLANT VEDA FOODS |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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