Correlation Between Anheuser Busch and Ingredion Incorporated

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

Diversification Opportunities for Anheuser Busch and Ingredion Incorporated

0.3

Correlation Coefficient

Anheuser Busch  Ingredion Incorporated

Weak diversification

The 3 months correlation between Anheuser and Ingredion is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and Ingredion Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingredion Incorporated 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 Ingredion Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingredion Incorporated has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and Ingredion Incorporated go up and down completely randomly.

Pair Corralation between Anheuser Busch and Ingredion Incorporated

Considering the 90-day investment horizon Anheuser Busch Inbev is expected to generate 1.39 times more return on investment than Ingredion Incorporated. However, Anheuser Busch is 1.39 times more volatile than Ingredion Incorporated. It trades about 0.1 of its potential returns per unit of risk. Ingredion Incorporated is currently generating about -0.17 per unit of risk. If you would invest  5,380  in Anheuser Busch Inbev on November 28, 2024 and sell it today you would earn a total of  492.00  from holding Anheuser Busch Inbev or generate 9.14% 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.  Ingredion Incorporated

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 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Anheuser Busch may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Ingredion Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ingredion Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Anheuser Busch and Ingredion Incorporated

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

The idea behind Anheuser Busch Inbev and Ingredion Incorporated 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.