Correlation Between Retail Estates and Anheuser-Busch InBev
Can any of the company-specific risk be diversified away by investing in both Retail Estates 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 Retail Estates 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 Retail Estates NV and Anheuser Busch InBev SANV, you can compare the effects of market volatilities on Retail Estates 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 Retail Estates with a short position of Anheuser-Busch InBev. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and Anheuser-Busch InBev.
Diversification Opportunities for Retail Estates and Anheuser-Busch InBev
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Retail and Anheuser-Busch is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates 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 Retail Estates 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 Retail Estates 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 Retail Estates i.e., Retail Estates and Anheuser-Busch InBev go up and down completely randomly.
Pair Corralation between Retail Estates and Anheuser-Busch InBev
Assuming the 90 days horizon Retail Estates NV is expected to generate 1.03 times more return on investment than Anheuser-Busch InBev. However, Retail Estates is 1.03 times more volatile than Anheuser Busch InBev SANV. It trades about 0.01 of its potential returns per unit of risk. Anheuser Busch InBev SANV is currently generating about -0.01 per unit of risk. If you would invest 5,440 in Retail Estates NV on November 9, 2024 and sell it today you would earn a total of 240.00 from holding Retail Estates NV or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Estates NV vs. Anheuser Busch InBev SANV
Performance |
| Timeline |
| Retail Estates NV |
| Anheuser Busch InBev |
Retail Estates and Anheuser-Busch InBev Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and Anheuser-Busch InBev
The main advantage of trading using opposite Retail Estates and Anheuser-Busch InBev positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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.| Retail Estates vs. Cass Information Systems | Retail Estates vs. Teradata Corp | Retail Estates vs. CHINA EDUCATION GROUP | Retail Estates vs. Treasury Wine Estates |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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