Correlation Between Amgen and Anheuser Busch
Can any of the company-specific risk be diversified away by investing in both Amgen and Anheuser Busch 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 Amgen and Anheuser Busch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Anheuser Busch Inbev, you can compare the effects of market volatilities on Amgen and Anheuser Busch 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 Amgen with a short position of Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Anheuser Busch.
Diversification Opportunities for Amgen and Anheuser Busch
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amgen and Anheuser is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Anheuser Busch Inbev in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch Inbev and Amgen 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 Amgen Inc are associated (or correlated) with Anheuser Busch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anheuser Busch Inbev has no effect on the direction of Amgen i.e., Amgen and Anheuser Busch go up and down completely randomly.
Pair Corralation between Amgen and Anheuser Busch
Given the investment horizon of 90 days Amgen Inc is expected to under-perform the Anheuser Busch. In addition to that, Amgen is 2.31 times more volatile than Anheuser Busch Inbev. It trades about -0.24 of its total potential returns per unit of risk. Anheuser Busch Inbev is currently generating about -0.37 per unit of volatility. If you would invest 5,855 in Anheuser Busch Inbev on September 4, 2024 and sell it today you would lose (441.00) from holding Anheuser Busch Inbev or give up 7.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amgen Inc vs. Anheuser Busch Inbev
Performance |
| Timeline |
| Amgen Inc |
| Anheuser Busch Inbev |
Amgen and Anheuser Busch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and Anheuser Busch
The main advantage of trading using opposite Amgen and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Anheuser Busch 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 Anheuser Busch will offset losses from the drop in Anheuser Busch's long position.The idea behind Amgen Inc and Anheuser Busch Inbev 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.| Anheuser Busch vs. Boston Beer | Anheuser Busch vs. Molson Coors Beverage | Anheuser Busch vs. Heineken NV | Anheuser Busch vs. Ambev SA ADR |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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