Correlation Between Southwest Gas and Ambev SA
Can any of the company-specific risk be diversified away by investing in both Southwest Gas 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 Southwest Gas and Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Gas Holdings and Ambev SA ADR, you can compare the effects of market volatilities on Southwest Gas 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 Southwest Gas with a short position of Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Gas and Ambev SA.
Diversification Opportunities for Southwest Gas and Ambev SA
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southwest and Ambev is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Gas Holdings 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 Southwest Gas 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 Southwest Gas Holdings 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 Southwest Gas i.e., Southwest Gas and Ambev SA go up and down completely randomly.
Pair Corralation between Southwest Gas and Ambev SA
Considering the 90-day investment horizon Southwest Gas Holdings is expected to generate 1.14 times more return on investment than Ambev SA. However, Southwest Gas is 1.14 times more volatile than Ambev SA ADR. It trades about 0.15 of its potential returns per unit of risk. Ambev SA ADR is currently generating about -0.12 per unit of risk. If you would invest 7,409 in Southwest Gas Holdings on August 28, 2024 and sell it today you would earn a total of 398.00 from holding Southwest Gas Holdings or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Gas Holdings vs. Ambev SA ADR
Performance |
| Timeline |
| Southwest Gas Holdings |
| Ambev SA ADR |
Southwest Gas and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Gas and Ambev SA
The main advantage of trading using opposite Southwest Gas and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Gas 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.| Southwest Gas vs. NewJersey Resources | Southwest Gas vs. Northwest Natural Gas | Southwest Gas vs. NorthWestern | Southwest Gas vs. Chesapeake Utilities |
| Ambev SA vs. Budweiser Brewing | Ambev SA vs. Anheuser Busch InBev SANV | Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Anheuser Busch Inbev |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |