Correlation Between Cumulus Media and Anheuser Busch
Can any of the company-specific risk be diversified away by investing in both Cumulus Media and Anheuser Busch 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 Cumulus Media and Anheuser Busch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumulus Media Class and Anheuser Busch Inbev, you can compare the effects of market volatilities on Cumulus Media and Anheuser Busch 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 Cumulus Media with a short position of Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumulus Media and Anheuser Busch.
Diversification Opportunities for Cumulus Media and Anheuser Busch
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cumulus and Anheuser is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Cumulus Media Class and Anheuser Busch Inbev in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch Inbev and Cumulus Media 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 Cumulus Media Class are associated (or correlated) with Anheuser Busch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anheuser Busch Inbev has no effect on the direction of Cumulus Media i.e., Cumulus Media and Anheuser Busch go up and down completely randomly.
Pair Corralation between Cumulus Media and Anheuser Busch
Given the investment horizon of 90 days Cumulus Media is expected to generate 3.5 times less return on investment than Anheuser Busch. In addition to that, Cumulus Media is 2.48 times more volatile than Anheuser Busch Inbev. It trades about 0.05 of its total potential returns per unit of risk. Anheuser Busch Inbev is currently generating about 0.41 per unit of volatility. If you would invest 4,999 in Anheuser Busch Inbev on November 28, 2024 and sell it today you would earn a total of 873.00 from holding Anheuser Busch Inbev or generate 17.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cumulus Media Class vs. Anheuser Busch Inbev
Performance |
| Timeline |
| Cumulus Media Class |
| Anheuser Busch Inbev |
Cumulus Media and Anheuser Busch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumulus Media and Anheuser Busch
The main advantage of trading using opposite Cumulus Media and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumulus Media position performs unexpectedly, Anheuser Busch 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 Anheuser Busch will offset losses from the drop in Anheuser Busch's long position.| Cumulus Media vs. E W Scripps | Cumulus Media vs. Gray Television | Cumulus Media vs. ProSiebenSat1 Media AG | Cumulus Media vs. RTL Group SA |
| 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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