Correlation Between Anheuser Busch and Herc Holdings
Can any of the company-specific risk be diversified away by investing in both Anheuser Busch and Herc Holdings 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 Herc Holdings 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 Herc Holdings, you can compare the effects of market volatilities on Anheuser Busch and Herc Holdings 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 Herc Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser Busch and Herc Holdings.
Diversification Opportunities for Anheuser Busch and Herc Holdings
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Anheuser and Herc is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and Herc Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc Holdings 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 Herc Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herc Holdings has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and Herc Holdings go up and down completely randomly.
Pair Corralation between Anheuser Busch and Herc Holdings
Considering the 90-day investment horizon Anheuser Busch Inbev is expected to under-perform the Herc Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Anheuser Busch Inbev is 2.2 times less risky than Herc Holdings. The stock trades about 0.0 of its potential returns per unit of risk. The Herc Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 12,149 in Herc Holdings on August 27, 2024 and sell it today you would earn a total of 10,143 from holding Herc Holdings or generate 83.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anheuser Busch Inbev vs. Herc Holdings
Performance |
| Timeline |
| Anheuser Busch Inbev |
| Herc Holdings |
Anheuser Busch and Herc Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anheuser Busch and Herc Holdings
The main advantage of trading using opposite Anheuser Busch and Herc Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anheuser Busch position performs unexpectedly, Herc Holdings 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 Herc Holdings will offset losses from the drop in Herc Holdings' long position.| Anheuser Busch vs. Boston Beer | Anheuser Busch vs. Molson Coors Beverage | Anheuser Busch vs. Heineken NV | Anheuser Busch vs. Ambev SA ADR |
| Herc Holdings vs. PROG Holdings | Herc Holdings vs. McGrath RentCorp | Herc Holdings vs. Mega Matrix Corp | Herc Holdings vs. FTAI Aviation Ltd |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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