Correlation Between Anheuser Busch and Limoneira

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

Diversification Opportunities for Anheuser Busch and Limoneira

-0.34

Correlation Coefficient

Anheuser Busch  Limoneira

Very good diversification

The 3 months correlation between Anheuser and Limoneira is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and Limoneira Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limoneira 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 Limoneira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limoneira has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and Limoneira go up and down completely randomly.

Pair Corralation between Anheuser Busch and Limoneira

Considering the 90-day investment horizon Anheuser Busch Inbev is expected to under-perform the Limoneira. But the stock apears to be less risky and, when comparing its historical volatility, Anheuser Busch Inbev is 1.56 times less risky than Limoneira. The stock trades about -0.27 of its potential returns per unit of risk. The Limoneira Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,589  in Limoneira Co on September 13, 2024 and sell it today you would earn a total of  206.00  from holding Limoneira Co or generate 7.96% return on investment over 90 days.

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

Anheuser Busch Inbev  vs.  Limoneira Co

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.

Limoneira

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Limoneira Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Limoneira may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Anheuser Busch and Limoneira

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

The idea behind Anheuser Busch Inbev and Limoneira Co 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.