Correlation Between Anheuser Busch and Blackline

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

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

Diversification Opportunities for Anheuser Busch and Blackline

-0.37

Correlation Coefficient

Anheuser Busch  Blackline

Very good diversification

The 3 months correlation between Anheuser and Blackline is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch InBev SANV and Blackline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackline and Anheuser Busch 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 Anheuser Busch InBev SANV are associated (or correlated) with Blackline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackline has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and Blackline go up and down completely randomly.

Pair Corralation between Anheuser Busch and Blackline

Assuming the 90 days trading horizon Anheuser Busch InBev SANV is expected to generate 0.79 times more return on investment than Blackline. However, Anheuser Busch InBev SANV is 1.26 times less risky than Blackline. It trades about -0.08 of its potential returns per unit of risk. Blackline is currently generating about -0.12 per unit of risk. If you would invest  4,815  in Anheuser Busch InBev SANV on October 22, 2024 and sell it today you would lose (104.00) from holding Anheuser Busch InBev SANV or give up 2.16% of portfolio value over 90 days.

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

Anheuser Busch InBev SANV  vs.  Blackline

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 weak 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.

Blackline

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackline are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Blackline may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Anheuser Busch and Blackline

The main advantage of trading using opposite Anheuser Busch and Blackline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anheuser Busch position performs unexpectedly, Blackline 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 Blackline will offset losses from the drop in Blackline's long position.

The idea behind Anheuser Busch InBev SANV and Blackline 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.