Correlation Between Anheuser Busch and NSTAR Electric
Can any of the company-specific risk be diversified away by investing in both Anheuser Busch and NSTAR Electric 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 NSTAR Electric 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 NSTAR Electric, you can compare the effects of market volatilities on Anheuser Busch and NSTAR Electric 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 NSTAR Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser Busch and NSTAR Electric.
Diversification Opportunities for Anheuser Busch and NSTAR Electric
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Anheuser and NSTAR is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and NSTAR Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSTAR Electric 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 NSTAR Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSTAR Electric has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and NSTAR Electric go up and down completely randomly.
Pair Corralation between Anheuser Busch and NSTAR Electric
Considering the 90-day investment horizon Anheuser Busch Inbev is expected to generate 0.95 times more return on investment than NSTAR Electric. However, Anheuser Busch Inbev is 1.06 times less risky than NSTAR Electric. It trades about -0.13 of its potential returns per unit of risk. NSTAR Electric is currently generating about -0.17 per unit of risk. If you would invest 5,010 in Anheuser Busch Inbev on October 20, 2024 and sell it today you would lose (210.00) from holding Anheuser Busch Inbev or give up 4.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 80.0% |
| Values | Daily Returns |
Anheuser Busch Inbev vs. NSTAR Electric
Performance |
| Timeline |
| Anheuser Busch Inbev |
| NSTAR Electric |
Anheuser Busch and NSTAR Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anheuser Busch and NSTAR Electric
The main advantage of trading using opposite Anheuser Busch and NSTAR Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anheuser Busch position performs unexpectedly, NSTAR Electric 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 NSTAR Electric will offset losses from the drop in NSTAR Electric'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 |
| NSTAR Electric vs. Olympic Steel | NSTAR Electric vs. Afya | NSTAR Electric vs. Chemours Co | NSTAR Electric vs. Minerals Technologies |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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