Correlation Between Anheuser Busch and Keurig Dr

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

Diversification Opportunities for Anheuser Busch and Keurig Dr

0.83

Correlation Coefficient

Anheuser Busch  Keurig Dr

Very poor diversification

The 3 months correlation between Anheuser and Keurig is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and Keurig Dr Pepper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keurig Dr Pepper 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 Keurig Dr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keurig Dr Pepper has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and Keurig Dr go up and down completely randomly.

Pair Corralation between Anheuser Busch and Keurig Dr

Considering the 90-day investment horizon Anheuser Busch Inbev is expected to generate 1.15 times more return on investment than Keurig Dr. However, Anheuser Busch is 1.15 times more volatile than Keurig Dr Pepper. It trades about 0.23 of its potential returns per unit of risk. Keurig Dr Pepper is currently generating about 0.08 per unit of risk. If you would invest  4,978  in Anheuser Busch Inbev on December 28, 2024 and sell it today you would earn a total of  1,226  from holding Anheuser Busch Inbev or generate 24.63% return on investment over 90 days.

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

Anheuser Busch Inbev  vs.  Keurig Dr Pepper

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 18 (%) 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.

Keurig Dr Pepper

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Keurig Dr Pepper are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental indicators, Keurig Dr may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Anheuser Busch and Keurig Dr

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

The idea behind Anheuser Busch Inbev and Keurig Dr Pepper 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.