Correlation Between Anheuser Busch and Stepan
Can any of the company-specific risk be diversified away by investing in both Anheuser Busch and Stepan 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 Stepan 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 Stepan Company, you can compare the effects of market volatilities on Anheuser Busch and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser Busch and Stepan.
Diversification Opportunities for Anheuser Busch and Stepan
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Anheuser and Stepan is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and Stepan go up and down completely randomly.
Pair Corralation between Anheuser Busch and Stepan
Considering the 90-day investment horizon Anheuser Busch Inbev is expected to generate 0.74 times more return on investment than Stepan. However, Anheuser Busch Inbev is 1.36 times less risky than Stepan. It trades about 0.52 of its potential returns per unit of risk. Stepan Company is currently generating about -0.03 per unit of risk. If you would invest 4,615 in Anheuser Busch Inbev on December 11, 2024 and sell it today you would earn a total of 1,631 from holding Anheuser Busch Inbev or generate 35.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anheuser Busch Inbev vs. Stepan Company
Performance |
| Timeline |
| Anheuser Busch Inbev |
| Stepan Company |
Anheuser Busch and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anheuser Busch and Stepan
The main advantage of trading using opposite Anheuser Busch and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anheuser Busch position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan'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 |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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