Correlation Between Altria and Ambev SA
Can any of the company-specific risk be diversified away by investing in both Altria 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 Altria and Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altria Group and Ambev SA ADR, you can compare the effects of market volatilities on Altria 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 Altria with a short position of Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altria and Ambev SA.
Diversification Opportunities for Altria and Ambev SA
Significant diversification
The 3 months correlation between Altria and Ambev is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group 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 Altria 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 Altria Group 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 Altria i.e., Altria and Ambev SA go up and down completely randomly.
Pair Corralation between Altria and Ambev SA
Allowing for the 90-day total investment horizon Altria Group is expected to generate 0.49 times more return on investment than Ambev SA. However, Altria Group is 2.03 times less risky than Ambev SA. It trades about -0.08 of its potential returns per unit of risk. Ambev SA ADR is currently generating about -0.2 per unit of risk. If you would invest 5,256 in Altria Group on October 22, 2024 and sell it today you would lose (70.00) from holding Altria Group or give up 1.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altria Group vs. Ambev SA ADR
Performance |
| Timeline |
| Altria Group |
| Ambev SA ADR |
Altria and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altria and Ambev SA
The main advantage of trading using opposite Altria and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altria 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.| Altria vs. British American Tobacco | Altria vs. Universal | Altria vs. Imperial Brands PLC | Altria vs. Philip Morris International |
| Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Boston Beer | Ambev SA vs. Carlsberg AS | Ambev SA vs. Compania Cervecerias Unidas |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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