Correlation Between Ambev SA and Glacier Bancorp

Can any of the company-specific risk be diversified away by investing in both Ambev SA and Glacier Bancorp 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 Ambev SA and Glacier Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ambev SA ADR and Glacier Bancorp, you can compare the effects of market volatilities on Ambev SA and Glacier Bancorp 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 Ambev SA with a short position of Glacier Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Glacier Bancorp.

Diversification Opportunities for Ambev SA and Glacier Bancorp

-0.63

Correlation Coefficient

Ambev SA  Glacier Bancorp

Excellent diversification

The 3 months correlation between Ambev and Glacier is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Glacier Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glacier Bancorp and Ambev SA 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 Ambev SA ADR are associated (or correlated) with Glacier Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glacier Bancorp has no effect on the direction of Ambev SA i.e., Ambev SA and Glacier Bancorp go up and down completely randomly.

Pair Corralation between Ambev SA and Glacier Bancorp

Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the Glacier Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Ambev SA ADR is 1.44 times less risky than Glacier Bancorp. The stock trades about -0.07 of its potential returns per unit of risk. The Glacier Bancorp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,061  in Glacier Bancorp on September 25, 2024 and sell it today you would earn a total of  984.00  from holding Glacier Bancorp or generate 24.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Ambev SA ADR  vs.  Glacier Bancorp

Ambev SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambev SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Glacier Bancorp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Glacier Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental indicators, Glacier Bancorp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ambev SA and Glacier Bancorp

The main advantage of trading using opposite Ambev SA and Glacier Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, Glacier Bancorp 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 Glacier Bancorp will offset losses from the drop in Glacier Bancorp's long position.

The idea behind Ambev SA ADR and Glacier Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.