Correlation Between Citizens Financial and Anheuser Busch

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

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

Diversification Opportunities for Citizens Financial and Anheuser Busch

-0.58

Correlation Coefficient

Citizens Financial  Anheuser Busch

Excellent diversification

The 3 months correlation between Citizens and Anheuser is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group 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 Citizens Financial 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 Citizens Financial Group 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 Citizens Financial i.e., Citizens Financial and Anheuser Busch go up and down completely randomly.

Pair Corralation between Citizens Financial and Anheuser Busch

Assuming the 90 days horizon Citizens Financial Group is expected to under-perform the Anheuser Busch. In addition to that, Citizens Financial is 1.01 times more volatile than Anheuser Busch InBev SANV. It trades about -0.09 of its total potential returns per unit of risk. Anheuser Busch InBev SANV is currently generating about 0.17 per unit of volatility. If you would invest  4,852  in Anheuser Busch InBev SANV on December 25, 2024 and sell it today you would earn a total of  852.00  from holding Anheuser Busch InBev SANV or generate 17.56% return on investment over 90 days.

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

Citizens Financial Group  vs.  Anheuser Busch InBev SANV

Citizens Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citizens Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Anheuser Busch InBev

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Anheuser Busch InBev SANV are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Anheuser Busch sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citizens Financial and Anheuser Busch

The main advantage of trading using opposite Citizens Financial and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial 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 Citizens Financial Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.