Correlation Between Anheuser Busch and Werner Enterprises

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

Diversification Opportunities for Anheuser Busch and Werner Enterprises

0.11

Correlation Coefficient

Anheuser Busch  Werner Enterprises

Average diversification

The 3 months correlation between Anheuser and Werner is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch InBev SANV and Werner Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Werner Enterprises 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 Werner Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Werner Enterprises has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and Werner Enterprises go up and down completely randomly.

Pair Corralation between Anheuser Busch and Werner Enterprises

Assuming the 90 days trading horizon Anheuser Busch InBev SANV is expected to under-perform the Werner Enterprises. But the stock apears to be less risky and, when comparing its historical volatility, Anheuser Busch InBev SANV is 1.21 times less risky than Werner Enterprises. The stock trades about -0.08 of its potential returns per unit of risk. The Werner Enterprises is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  3,406  in Werner Enterprises on October 22, 2024 and sell it today you would earn a total of  214.00  from holding Werner Enterprises or generate 6.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

Anheuser Busch InBev SANV  vs.  Werner Enterprises

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 unsteady 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.

Werner Enterprises

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Werner Enterprises are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Werner Enterprises may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Anheuser Busch and Werner Enterprises

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

The idea behind Anheuser Busch InBev SANV and Werner Enterprises 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.