Correlation Between Flowers Foods and Anheuser Busch
Can any of the company-specific risk be diversified away by investing in both Flowers Foods 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 Flowers Foods and Anheuser Busch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowers Foods and Anheuser Busch Inbev, you can compare the effects of market volatilities on Flowers Foods 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 Flowers Foods with a short position of Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowers Foods and Anheuser Busch.
Diversification Opportunities for Flowers Foods and Anheuser Busch
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Flowers and Anheuser is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Flowers Foods 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 Flowers Foods 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 Flowers Foods 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 Flowers Foods i.e., Flowers Foods and Anheuser Busch go up and down completely randomly.
Pair Corralation between Flowers Foods and Anheuser Busch
Considering the 90-day investment horizon Flowers Foods is expected to under-perform the Anheuser Busch. But the stock apears to be less risky and, when comparing its historical volatility, Flowers Foods is 1.02 times less risky than Anheuser Busch. The stock trades about -0.02 of its potential returns per unit of risk. The Anheuser Busch Inbev is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 5,740 in Anheuser Busch Inbev on August 27, 2024 and sell it today you would lose (267.00) from holding Anheuser Busch Inbev or give up 4.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowers Foods vs. Anheuser Busch Inbev
Performance |
| Timeline |
| Flowers Foods |
| Anheuser Busch Inbev |
Flowers Foods and Anheuser Busch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowers Foods and Anheuser Busch
The main advantage of trading using opposite Flowers Foods and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowers Foods 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.| Flowers Foods vs. ConAgra Foods | Flowers Foods vs. McCormick Company Incorporated | Flowers Foods vs. Campbell Soup | Flowers Foods vs. Kellanova |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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