Correlation Between Anheuser Busch and Philip Morris
Can any of the company-specific risk be diversified away by investing in both Anheuser Busch and Philip Morris 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 Philip Morris 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 Philip Morris International, you can compare the effects of market volatilities on Anheuser Busch and Philip Morris 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 Philip Morris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser Busch and Philip Morris.
Diversification Opportunities for Anheuser Busch and Philip Morris
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Anheuser and Philip is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and Philip Morris International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philip Morris Intern 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 Philip Morris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philip Morris Intern has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and Philip Morris go up and down completely randomly.
Pair Corralation between Anheuser Busch and Philip Morris
Considering the 90-day investment horizon Anheuser Busch is expected to generate 8.53 times less return on investment than Philip Morris. In addition to that, Anheuser Busch is 1.1 times more volatile than Philip Morris International. It trades about 0.01 of its total potential returns per unit of risk. Philip Morris International is currently generating about 0.11 per unit of volatility. If you would invest 8,322 in Philip Morris International on August 27, 2024 and sell it today you would earn a total of 4,677 from holding Philip Morris International or generate 56.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anheuser Busch Inbev vs. Philip Morris International
Performance |
| Timeline |
| Anheuser Busch Inbev |
| Philip Morris Intern |
Anheuser Busch and Philip Morris Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anheuser Busch and Philip Morris
The main advantage of trading using opposite Anheuser Busch and Philip Morris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anheuser Busch position performs unexpectedly, Philip Morris 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 Philip Morris will offset losses from the drop in Philip Morris' long position.| Anheuser Busch vs. Boston Beer | Anheuser Busch vs. Molson Coors Beverage | Anheuser Busch vs. Heineken NV | Anheuser Busch vs. Ambev SA ADR |
| Philip Morris vs. British American Tobacco | Philip Morris vs. Universal | Philip Morris vs. Imperial Brands PLC | Philip Morris vs. Altria Group |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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