Correlation Between Localiza Rent and Ambev SA
Can any of the company-specific risk be diversified away by investing in both Localiza Rent 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 Localiza Rent and Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Localiza Rent a and Ambev SA, you can compare the effects of market volatilities on Localiza Rent 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 Localiza Rent with a short position of Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Localiza Rent and Ambev SA.
Diversification Opportunities for Localiza Rent and Ambev SA
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Localiza and Ambev is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Localiza Rent a and Ambev SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA and Localiza Rent 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 Localiza Rent a 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 has no effect on the direction of Localiza Rent i.e., Localiza Rent and Ambev SA go up and down completely randomly.
Pair Corralation between Localiza Rent and Ambev SA
If you would invest (100.00) in Ambev SA on November 1, 2024 and sell it today you would earn a total of 100.00 from holding Ambev SA or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.0% |
| Values | Daily Returns |
Localiza Rent a vs. Ambev SA
Performance |
| Timeline |
| Localiza Rent a |
| Ambev SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Localiza Rent and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Localiza Rent and Ambev SA
The main advantage of trading using opposite Localiza Rent and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Localiza Rent 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.| Localiza Rent vs. Lojas Renner SA | Localiza Rent vs. Raia Drogasil SA | Localiza Rent vs. Equatorial Energia SA | Localiza Rent vs. CCR SA |
| Ambev SA vs. WEG SA | Ambev SA vs. Ita Unibanco Holding | Ambev SA vs. Itasa Investimentos | Ambev SA vs. Banco Bradesco SA |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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