Correlation Between Hercules Capital and Anheuser Busch

Can any of the company-specific risk be diversified away by investing in both Hercules Capital 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 Hercules Capital and Anheuser Busch into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hercules Capital and Anheuser Busch InBev SANV, you can compare the effects of market volatilities on Hercules Capital 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 Hercules Capital with a short position of Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hercules Capital and Anheuser Busch.

Diversification Opportunities for Hercules Capital and Anheuser Busch

-0.45

Correlation Coefficient

Hercules Capital  Anheuser Busch

Very good diversification

The 3 months correlation between Hercules and Anheuser is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital 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 Hercules Capital 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 Hercules Capital 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 Hercules Capital i.e., Hercules Capital and Anheuser Busch go up and down completely randomly.

Pair Corralation between Hercules Capital and Anheuser Busch

Assuming the 90 days horizon Hercules Capital is expected to generate 1.35 times more return on investment than Anheuser Busch. However, Hercules Capital is 1.35 times more volatile than Anheuser Busch InBev SANV. It trades about 0.26 of its potential returns per unit of risk. Anheuser Busch InBev SANV is currently generating about -0.26 per unit of risk. If you would invest  1,756  in Hercules Capital on October 7, 2024 and sell it today you would earn a total of  254.00  from holding Hercules Capital or generate 14.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hercules Capital  vs.  Anheuser Busch InBev SANV

Hercules Capital

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hercules Capital are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Hercules Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Anheuser Busch InBev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anheuser Busch InBev SANV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hercules Capital and Anheuser Busch

The main advantage of trading using opposite Hercules Capital and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hercules Capital 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 Hercules Capital and Anheuser Busch InBev SANV 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.

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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.