Correlation Between Acco Brands and Anheuser Busch

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

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

Diversification Opportunities for Acco Brands and Anheuser Busch

-0.8

Correlation Coefficient

Acco Brands  Anheuser Busch

Pay attention - limited upside

The 3 months correlation between Acco and Anheuser is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Anheuser Busch Inbev in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch Inbev and Acco Brands 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 Acco Brands 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 Acco Brands i.e., Acco Brands and Anheuser Busch go up and down completely randomly.

Pair Corralation between Acco Brands and Anheuser Busch

Given the investment horizon of 90 days Acco Brands is expected to under-perform the Anheuser Busch. In addition to that, Acco Brands is 1.84 times more volatile than Anheuser Busch Inbev. It trades about -0.07 of its total potential returns per unit of risk. Anheuser Busch Inbev is currently generating about 0.22 per unit of volatility. If you would invest  5,037  in Anheuser Busch Inbev on December 27, 2024 and sell it today you would earn a total of  1,150  from holding Anheuser Busch Inbev or generate 22.83% return on investment over 90 days.

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

Acco Brands  vs.  Anheuser Busch Inbev

Acco Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Acco Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Anheuser Busch Inbev

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Anheuser Busch Inbev are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Anheuser Busch exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acco Brands and Anheuser Busch

The main advantage of trading using opposite Acco Brands and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acco Brands 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 Acco Brands and Anheuser Busch Inbev 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.