Correlation Between Anheuser Busch and ArcBest

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

Diversification Opportunities for Anheuser Busch and ArcBest

-0.36

Correlation Coefficient

Anheuser Busch  ArcBest

Very good diversification

The 3 months correlation between Anheuser and ArcBest is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch InBev SANV and ArcBest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcBest 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 ArcBest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcBest has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and ArcBest go up and down completely randomly.

Pair Corralation between Anheuser Busch and ArcBest

Assuming the 90 days trading horizon Anheuser Busch InBev SANV is expected to generate 0.54 times more return on investment than ArcBest. However, Anheuser Busch InBev SANV is 1.87 times less risky than ArcBest. It trades about -0.32 of its potential returns per unit of risk. ArcBest is currently generating about -0.37 per unit of risk. If you would invest  5,022  in Anheuser Busch InBev SANV on October 7, 2024 and sell it today you would lose (284.00) from holding Anheuser Busch InBev SANV or give up 5.66% 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.  ArcBest

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.

ArcBest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ArcBest has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ArcBest is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Anheuser Busch and ArcBest

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

The idea behind Anheuser Busch InBev SANV and ArcBest 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.