Correlation Between Ambev SA and Wallbox NV

Can any of the company-specific risk be diversified away by investing in both Ambev SA and Wallbox NV 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 Wallbox NV 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 Wallbox NV WT, you can compare the effects of market volatilities on Ambev SA and Wallbox NV 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 Wallbox NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Wallbox NV.

Diversification Opportunities for Ambev SA and Wallbox NV

0.18

Correlation Coefficient

Ambev SA  Wallbox NV

Average diversification

The 3 months correlation between Ambev and Wallbox is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Wallbox NV WT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wallbox NV WT 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 Wallbox NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wallbox NV WT has no effect on the direction of Ambev SA i.e., Ambev SA and Wallbox NV go up and down completely randomly.

Pair Corralation between Ambev SA and Wallbox NV

Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the Wallbox NV. But the stock apears to be less risky and, when comparing its historical volatility, Ambev SA ADR is 15.91 times less risky than Wallbox NV. The stock trades about -0.21 of its potential returns per unit of risk. The Wallbox NV WT is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  8.48  in Wallbox NV WT on October 6, 2024 and sell it today you would lose (3.73) from holding Wallbox NV WT or give up 43.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	79.03%
Values	Daily Returns

Ambev SA ADR  vs.  Wallbox NV WT

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Wallbox NV WT

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wallbox NV WT are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Wallbox NV unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ambev SA and Wallbox NV

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

The idea behind Ambev SA ADR and Wallbox NV WT 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.