Correlation Between UCB SA and Anheuser Busch
Can any of the company-specific risk be diversified away by investing in both UCB SA 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 UCB SA and Anheuser Busch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UCB SA and Anheuser Busch Inbev, you can compare the effects of market volatilities on UCB SA 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 UCB SA with a short position of Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of UCB SA and Anheuser Busch.
Diversification Opportunities for UCB SA and Anheuser Busch
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UCB and Anheuser is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding UCB SA 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 UCB SA 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 UCB SA 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 UCB SA i.e., UCB SA and Anheuser Busch go up and down completely randomly.
Pair Corralation between UCB SA and Anheuser Busch
Assuming the 90 days trading horizon UCB SA is expected to generate 1.3 times more return on investment than Anheuser Busch. However, UCB SA is 1.3 times more volatile than Anheuser Busch Inbev. It trades about 0.13 of its potential returns per unit of risk. Anheuser Busch Inbev is currently generating about 0.0 per unit of risk. If you would invest 7,026 in UCB SA on August 26, 2024 and sell it today you would earn a total of 10,974 from holding UCB SA or generate 156.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UCB SA vs. Anheuser Busch Inbev
Performance |
| Timeline |
| UCB SA |
| Anheuser Busch Inbev |
UCB SA and Anheuser Busch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UCB SA and Anheuser Busch
The main advantage of trading using opposite UCB SA and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UCB SA 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.The idea behind UCB SA and Anheuser Busch Inbev pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Anheuser Busch vs. Brederode SA | Anheuser Busch vs. Compagnie du Bois | Anheuser Busch vs. Ackermans Van Haaren | Anheuser Busch vs. Sofina Socit Anonyme |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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