Correlation Between Compagnie and Anheuser Busch
Can any of the company-specific risk be diversified away by investing in both Compagnie 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 Compagnie and Anheuser Busch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie du Bois and Anheuser Busch Inbev, you can compare the effects of market volatilities on Compagnie 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 Compagnie with a short position of Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Anheuser Busch.
Diversification Opportunities for Compagnie and Anheuser Busch
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Compagnie and Anheuser is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie du Bois 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 Compagnie 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 Compagnie du Bois 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 Compagnie i.e., Compagnie and Anheuser Busch go up and down completely randomly.
Pair Corralation between Compagnie and Anheuser Busch
Assuming the 90 days trading horizon Compagnie du Bois is expected to generate 1.05 times more return on investment than Anheuser Busch. However, Compagnie is 1.05 times more volatile than Anheuser Busch Inbev. It trades about -0.2 of its potential returns per unit of risk. Anheuser Busch Inbev is currently generating about -0.39 per unit of risk. If you would invest 23,700 in Compagnie du Bois on August 29, 2024 and sell it today you would lose (1,900) from holding Compagnie du Bois or give up 8.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie du Bois vs. Anheuser Busch Inbev
Performance |
| Timeline |
| Compagnie du Bois |
| Anheuser Busch Inbev |
Compagnie and Anheuser Busch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie and Anheuser Busch
The main advantage of trading using opposite Compagnie and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie 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.| Compagnie vs. Groep Brussel Lambert | Compagnie vs. Sofina Socit Anonyme | Compagnie vs. Ackermans Van Haaren | Compagnie vs. KBC Ancora |
| Anheuser Busch vs. KBC Groep NV | Anheuser Busch vs. Proximus NV | Anheuser Busch vs. ageas SANV | Anheuser Busch vs. Solvay SA |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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