Correlation Between Visa and Ambev SA
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Inc and Ambev SA, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Ambev SA.
Diversification Opportunities for Visa and Ambev SA
Excellent diversification
The 3 months correlation between Visa and Ambev is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Visa Inc and Ambev SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA and Visa 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 Visa Inc 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 Visa i.e., Visa and Ambev SA go up and down completely randomly.
Pair Corralation between Visa and Ambev SA
Assuming the 90 days trading horizon Visa Inc is expected to generate 1.04 times more return on investment than Ambev SA. However, Visa is 1.04 times more volatile than Ambev SA. It trades about 0.08 of its potential returns per unit of risk. Ambev SA is currently generating about -0.02 per unit of risk. If you would invest 5,595 in Visa Inc on August 23, 2024 and sell it today you would earn a total of 3,396 from holding Visa Inc or generate 60.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Visa Inc vs. Ambev SA
Performance |
| Timeline |
| Visa Inc |
| Ambev SA |
Visa and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Ambev SA
The main advantage of trading using opposite Visa and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. United Airlines Holdings | Visa vs. Micron Technology | Visa vs. Align Technology | Visa vs. Bread Financial Holdings |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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