Correlation Between Anheuser Busch and ENTAIN PLC

Can any of the company-specific risk be diversified away by investing in both Anheuser Busch and ENTAIN PLC 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 ENTAIN PLC 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 ENTAIN PLC UNSPADR1, you can compare the effects of market volatilities on Anheuser Busch and ENTAIN PLC 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 ENTAIN PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser Busch and ENTAIN PLC.

Diversification Opportunities for Anheuser Busch and ENTAIN PLC

-0.24

Correlation Coefficient

Anheuser Busch  ENTAIN PLC

Very good diversification

The 3 months correlation between Anheuser and ENTAIN is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch InBev SANV and ENTAIN PLC UNSPADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENTAIN PLC UNSPADR1 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 ENTAIN PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENTAIN PLC UNSPADR1 has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and ENTAIN PLC go up and down completely randomly.

Pair Corralation between Anheuser Busch and ENTAIN PLC

Assuming the 90 days trading horizon Anheuser Busch InBev SANV is expected to under-perform the ENTAIN PLC. But the stock apears to be less risky and, when comparing its historical volatility, Anheuser Busch InBev SANV is 1.98 times less risky than ENTAIN PLC. The stock trades about -0.28 of its potential returns per unit of risk. The ENTAIN PLC UNSPADR1 is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  900.00  in ENTAIN PLC UNSPADR1 on October 8, 2024 and sell it today you would lose (95.00) from holding ENTAIN PLC UNSPADR1 or give up 10.56% 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.  ENTAIN PLC UNSPADR1

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 fragile 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.

ENTAIN PLC UNSPADR1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENTAIN PLC UNSPADR1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Anheuser Busch and ENTAIN PLC

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

The idea behind Anheuser Busch InBev SANV and ENTAIN PLC UNSPADR1 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.