Correlation Between Heineken and Anheuser-Busch InBev
Can any of the company-specific risk be diversified away by investing in both Heineken and Anheuser-Busch InBev 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 Heineken and Anheuser-Busch InBev into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heineken and Anheuser Busch InBev SANV, you can compare the effects of market volatilities on Heineken and Anheuser-Busch InBev 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 Heineken with a short position of Anheuser-Busch InBev. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heineken and Anheuser-Busch InBev.
Diversification Opportunities for Heineken and Anheuser-Busch InBev
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Heineken and Anheuser-Busch is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Heineken and Anheuser Busch InBev SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch InBev and Heineken 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 Heineken are associated (or correlated) with Anheuser-Busch InBev. 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 Heineken i.e., Heineken and Anheuser-Busch InBev go up and down completely randomly.
Pair Corralation between Heineken and Anheuser-Busch InBev
Assuming the 90 days trading horizon Heineken is expected to generate 0.5 times more return on investment than Anheuser-Busch InBev. However, Heineken is 2.0 times less risky than Anheuser-Busch InBev. It trades about -0.58 of its potential returns per unit of risk. Anheuser Busch InBev SANV is currently generating about -0.38 per unit of risk. If you would invest 7,900 in Heineken on August 24, 2024 and sell it today you would lose (912.00) from holding Heineken or give up 11.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Heineken vs. Anheuser Busch InBev SANV
Performance |
| Timeline |
| Heineken |
| Anheuser Busch InBev |
Heineken and Anheuser-Busch InBev Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heineken and Anheuser-Busch InBev
The main advantage of trading using opposite Heineken and Anheuser-Busch InBev positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heineken position performs unexpectedly, Anheuser-Busch InBev 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 InBev will offset losses from the drop in Anheuser-Busch InBev's long position.| Heineken vs. Unilever PLC | Heineken vs. Koninklijke Philips NV | Heineken vs. Akzo Nobel NV | Heineken vs. Koninklijke Ahold Delhaize |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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