Correlation Between Anheuser Busch and Lion One
Can any of the company-specific risk be diversified away by investing in both Anheuser Busch and Lion One 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 Lion One 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 Lion One Metals, you can compare the effects of market volatilities on Anheuser Busch and Lion One 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 Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser Busch and Lion One.
Diversification Opportunities for Anheuser Busch and Lion One
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Anheuser and Lion is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and Lion One go up and down completely randomly.
Pair Corralation between Anheuser Busch and Lion One
Considering the 90-day investment horizon Anheuser Busch Inbev is expected to generate 0.28 times more return on investment than Lion One. However, Anheuser Busch Inbev is 3.62 times less risky than Lion One. It trades about -0.08 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.04 per unit of risk. If you would invest 6,457 in Anheuser Busch Inbev on November 3, 2024 and sell it today you would lose (1,539) from holding Anheuser Busch Inbev or give up 23.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Anheuser Busch Inbev vs. Lion One Metals
Performance |
| Timeline |
| Anheuser Busch Inbev |
| Lion One Metals |
Anheuser Busch and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anheuser Busch and Lion One
The main advantage of trading using opposite Anheuser Busch and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anheuser Busch position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One'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 |
| Lion One vs. Piedmont Lithium Ltd | Lion One vs. Sigma Lithium Resources | Lion One vs. Standard Lithium | Lion One vs. MP Materials Corp |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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