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 NV 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
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Heineken and Anheuser-Busch is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Heineken NV 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 NV 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 horizon Heineken NV is expected to under-perform the Anheuser-Busch InBev. But the otc stock apears to be less risky and, when comparing its historical volatility, Heineken NV is 1.16 times less risky than Anheuser-Busch InBev. The otc stock trades about -0.11 of its potential returns per unit of risk. The Anheuser Busch InBev SANV is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,970 in Anheuser Busch InBev SANV on November 2, 2024 and sell it today you would earn a total of 20.00 from holding Anheuser Busch InBev SANV or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heineken NV vs. Anheuser Busch InBev SANV
Performance |
| Timeline |
| Heineken NV |
| 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. Anheuser Busch InBev SANV | Heineken vs. Carlsberg AS | Heineken vs. Molson Coors Brewing | Heineken vs. Compania Cervecerias Unidas |
| Anheuser-Busch InBev vs. Heineken NV | Anheuser-Busch InBev vs. Carlsberg AS | Anheuser-Busch InBev vs. Molson Coors Brewing | Anheuser-Busch InBev vs. Compania Cervecerias Unidas |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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