Correlation Between Anheuser-Busch InBev and Heineken Holding
Can any of the company-specific risk be diversified away by investing in both Anheuser-Busch InBev and Heineken Holding 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 Holding 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 Holding NV, you can compare the effects of market volatilities on Anheuser-Busch InBev and Heineken Holding 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 Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser-Busch InBev and Heineken Holding.
Diversification Opportunities for Anheuser-Busch InBev and Heineken Holding
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Anheuser-Busch and Heineken is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch InBev SANV and Heineken Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Holding 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 Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken Holding has no effect on the direction of Anheuser-Busch InBev i.e., Anheuser-Busch InBev and Heineken Holding go up and down completely randomly.
Pair Corralation between Anheuser-Busch InBev and Heineken Holding
Assuming the 90 days horizon Anheuser Busch InBev SANV is expected to generate 1.07 times more return on investment than Heineken Holding. However, Anheuser-Busch InBev is 1.07 times more volatile than Heineken Holding NV. It trades about 0.0 of its potential returns per unit of risk. Heineken Holding NV is currently generating about -0.01 per unit of risk. If you would invest 5,720 in Anheuser Busch InBev SANV on August 28, 2024 and sell it today you would lose (266.00) from holding Anheuser Busch InBev SANV or give up 4.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anheuser Busch InBev SANV vs. Heineken Holding NV
Performance |
| Timeline |
| Anheuser Busch InBev |
| Heineken Holding |
Anheuser-Busch InBev and Heineken Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anheuser-Busch InBev and Heineken Holding
The main advantage of trading using opposite Anheuser-Busch InBev and Heineken Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anheuser-Busch InBev position performs unexpectedly, Heineken Holding 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 Holding will offset losses from the drop in Heineken Holding'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 Holding vs. Barfresh Food Group | Heineken Holding vs. Fbec Worldwide | Heineken Holding vs. Flow Beverage Corp | Heineken Holding vs. Eq Energy Drink |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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