Correlation Between Anheuser Busch and Heineken Holding

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

Diversification Opportunities for Anheuser Busch and Heineken Holding

0.96

Correlation Coefficient

Anheuser Busch  Heineken Holding

Almost no diversification

The 3 months correlation between Anheuser and Heineken is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and Heineken Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Holding 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 Heineken Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken Holding has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and Heineken Holding go up and down completely randomly.

Pair Corralation between Anheuser Busch and Heineken Holding

Considering the 90-day investment horizon Anheuser Busch Inbev is expected to generate 1.08 times more return on investment than Heineken Holding. However, Anheuser Busch is 1.08 times more volatile than Heineken Holding NV. It trades about -0.27 of its potential returns per unit of risk. Heineken Holding NV is currently generating about -0.35 per unit of risk. If you would invest  5,625  in Anheuser Busch Inbev on September 16, 2024 and sell it today you would lose (282.00) from holding Anheuser Busch Inbev or give up 5.01% of portfolio value over 90 days.

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

Anheuser Busch Inbev  vs.  Heineken Holding NV

Anheuser Busch Inbev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anheuser Busch Inbev has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Heineken Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heineken Holding NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Anheuser Busch and Heineken Holding

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

The idea behind Anheuser Busch Inbev and Heineken Holding NV 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.