Correlation Between Anheuser Busch and Jacquet Metal

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

Diversification Opportunities for Anheuser Busch and Jacquet Metal

-0.23

Correlation Coefficient

Anheuser Busch  Jacquet Metal

Very good diversification

The 3 months correlation between Anheuser and Jacquet is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch InBev SANV and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service 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 Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and Jacquet Metal go up and down completely randomly.

Pair Corralation between Anheuser Busch and Jacquet Metal

Assuming the 90 days trading horizon Anheuser Busch InBev SANV is expected to under-perform the Jacquet Metal. But the stock apears to be less risky and, when comparing its historical volatility, Anheuser Busch InBev SANV is 1.41 times less risky than Jacquet Metal. The stock trades about -0.02 of its potential returns per unit of risk. The Jacquet Metal Service is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,669  in Jacquet Metal Service on October 8, 2024 and sell it today you would earn a total of  57.00  from holding Jacquet Metal Service or generate 3.42% return on investment over 90 days.

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

Anheuser Busch InBev SANV  vs.  Jacquet Metal Service

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. In spite of unsteady performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Jacquet Metal Service

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jacquet Metal Service are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Jacquet Metal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Anheuser Busch and Jacquet Metal

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

The idea behind Anheuser Busch InBev SANV and Jacquet Metal Service 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.