Correlation Between Anheuser Busch and Heineken
Can any of the company-specific risk be diversified away by investing in both Anheuser Busch and Heineken 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 Anheuser Busch and Heineken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anheuser Busch Inbev and Heineken NV, you can compare the effects of market volatilities on Anheuser Busch and Heineken 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 Anheuser Busch with a short position of Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser Busch and Heineken.
Diversification Opportunities for Anheuser Busch and Heineken
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Anheuser and Heineken is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and Anheuser Busch 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 Anheuser Busch Inbev are associated (or correlated) with Heineken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken NV has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and Heineken go up and down completely randomly.
Pair Corralation between Anheuser Busch and Heineken
Considering the 90-day investment horizon Anheuser Busch Inbev is expected to under-perform the Heineken. But the stock apears to be less risky and, when comparing its historical volatility, Anheuser Busch Inbev is 1.1 times less risky than Heineken. The stock trades about -0.52 of its potential returns per unit of risk. The Heineken NV is currently generating about -0.43 of returns per unit of risk over similar time horizon. If you would invest 8,596 in Heineken NV on August 27, 2024 and sell it today you would lose (1,171) from holding Heineken NV or give up 13.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anheuser Busch Inbev vs. Heineken NV
Performance |
| Timeline |
| Anheuser Busch Inbev |
| Heineken NV |
Anheuser Busch and Heineken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anheuser Busch and Heineken
The main advantage of trading using opposite Anheuser Busch and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anheuser Busch position performs unexpectedly, Heineken 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 Heineken will offset losses from the drop in Heineken's long position.| Anheuser Busch vs. Boston Beer | Anheuser Busch vs. Molson Coors Beverage | Anheuser Busch vs. Heineken NV | Anheuser Busch vs. Ambev SA ADR |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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