Correlation Between XLMedia PLC and Anheuser Busch

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

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

Diversification Opportunities for XLMedia PLC and Anheuser Busch

0.25

Correlation Coefficient

XLMedia PLC  Anheuser Busch

Modest diversification

The 3 months correlation between XLMedia and Anheuser is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and Anheuser Busch InBev SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch InBev and XLMedia PLC 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 XLMedia PLC are associated (or correlated) with Anheuser Busch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anheuser Busch InBev has no effect on the direction of XLMedia PLC i.e., XLMedia PLC and Anheuser Busch go up and down completely randomly.

Pair Corralation between XLMedia PLC and Anheuser Busch

Assuming the 90 days horizon XLMedia PLC is expected to under-perform the Anheuser Busch. In addition to that, XLMedia PLC is 4.26 times more volatile than Anheuser Busch InBev SANV. It trades about 0.0 of its total potential returns per unit of risk. Anheuser Busch InBev SANV is currently generating about 0.16 per unit of volatility. If you would invest  5,040  in Anheuser Busch InBev SANV on December 5, 2024 and sell it today you would earn a total of  812.00  from holding Anheuser Busch InBev SANV or generate 16.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

XLMedia PLC  vs.  Anheuser Busch InBev SANV

XLMedia PLC

Risk-Adjusted Performance

Very Weak

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

Anheuser Busch InBev

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Anheuser Busch InBev SANV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anheuser Busch sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XLMedia PLC and Anheuser Busch

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

The idea behind XLMedia PLC and Anheuser Busch InBev SANV 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.