Correlation Between Grocery Outlet and Ambev SA
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and Ambev SA 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 Grocery Outlet and Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grocery Outlet Holding and Ambev SA ADR, you can compare the effects of market volatilities on Grocery Outlet and Ambev SA 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 Grocery Outlet with a short position of Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Ambev SA.
Diversification Opportunities for Grocery Outlet and Ambev SA
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grocery and Ambev is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Ambev SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA ADR and Grocery Outlet 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 Grocery Outlet Holding are associated (or correlated) with Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA ADR has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Ambev SA go up and down completely randomly.
Pair Corralation between Grocery Outlet and Ambev SA
Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Ambev SA. In addition to that, Grocery Outlet is 1.54 times more volatile than Ambev SA ADR. It trades about -0.01 of its total potential returns per unit of risk. Ambev SA ADR is currently generating about -0.02 per unit of volatility. If you would invest 263.00 in Ambev SA ADR on August 30, 2024 and sell it today you would lose (48.00) from holding Ambev SA ADR or give up 18.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grocery Outlet Holding vs. Ambev SA ADR
Performance |
| Timeline |
| Grocery Outlet Holding |
| Ambev SA ADR |
Grocery Outlet and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grocery Outlet and Ambev SA
The main advantage of trading using opposite Grocery Outlet and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet position performs unexpectedly, Ambev SA 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 Ambev SA will offset losses from the drop in Ambev SA's long position.| Grocery Outlet vs. Village Super Market | Grocery Outlet vs. Sprouts Farmers Market | Grocery Outlet vs. Albertsons Companies | Grocery Outlet vs. Dingdong ADR |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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