Correlation Between Anheuser Busch and Montea CVA

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

By analyzing existing cross correlation between Anheuser Busch Inbev and Montea CVA, you can compare the effects of market volatilities on Anheuser Busch and Montea CVA 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 Montea CVA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser Busch and Montea CVA.

Diversification Opportunities for Anheuser Busch and Montea CVA

0.36

Correlation Coefficient

Anheuser Busch  Montea CVA

Weak diversification

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

Pair Corralation between Anheuser Busch and Montea CVA

Assuming the 90 days trading horizon Anheuser Busch Inbev is expected to generate 1.3 times more return on investment than Montea CVA. However, Anheuser Busch is 1.3 times more volatile than Montea CVA. It trades about 0.13 of its potential returns per unit of risk. Montea CVA is currently generating about -0.02 per unit of risk. If you would invest  5,110  in Anheuser Busch Inbev on December 1, 2024 and sell it today you would earn a total of  654.00  from holding Anheuser Busch Inbev or generate 12.8% return on investment over 90 days.

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

Anheuser Busch Inbev  vs.  Montea CVA

Anheuser Busch Inbev

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anheuser Busch Inbev are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Anheuser Busch reported solid returns over the last few months and may actually be approaching a breakup point.

Montea CVA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Montea CVA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Montea CVA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Anheuser Busch and Montea CVA

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

The idea behind Anheuser Busch Inbev and Montea CVA 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.