Correlation Between Anheuser-Busch InBev and Heineken
Can any of the company-specific risk be diversified away by investing in both Anheuser-Busch InBev and Heineken 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 InBev and Heineken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anheuser Busch InBev SANV and Heineken NV, you can compare the effects of market volatilities on Anheuser-Busch InBev and Heineken 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 InBev with a short position of Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser-Busch InBev and Heineken.
Diversification Opportunities for Anheuser-Busch InBev and Heineken
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Anheuser-Busch and Heineken is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch InBev SANV and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and Anheuser-Busch InBev 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 SANV are associated (or correlated) with Heineken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken NV has no effect on the direction of Anheuser-Busch InBev i.e., Anheuser-Busch InBev and Heineken go up and down completely randomly.
Pair Corralation between Anheuser-Busch InBev and Heineken
Assuming the 90 days horizon Anheuser Busch InBev SANV is expected to under-perform the Heineken. In addition to that, Anheuser-Busch InBev is 1.38 times more volatile than Heineken NV. It trades about -0.5 of its total potential returns per unit of risk. Heineken NV is currently generating about -0.63 per unit of volatility. If you would invest 4,294 in Heineken NV on August 28, 2024 and sell it today you would lose (603.00) from holding Heineken NV or give up 14.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anheuser Busch InBev SANV vs. Heineken NV
Performance |
| Timeline |
| Anheuser Busch InBev |
| Heineken NV |
Anheuser-Busch InBev and Heineken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anheuser-Busch InBev and Heineken
The main advantage of trading using opposite Anheuser-Busch InBev and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anheuser-Busch InBev position performs unexpectedly, Heineken 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 Heineken will offset losses from the drop in Heineken's long position.| Anheuser-Busch InBev vs. Barfresh Food Group | Anheuser-Busch InBev vs. Fbec Worldwide | Anheuser-Busch InBev vs. Flow Beverage Corp | Anheuser-Busch InBev vs. Eq Energy Drink |
| Heineken vs. Anheuser Busch InBev SANV | Heineken vs. Tsingtao Brewery Co | Heineken vs. Carlsberg AS | Heineken vs. Heineken Holding NV |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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