Correlation Between Anheuser-Busch InBev and Heineken

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

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

Diversification Opportunities for Anheuser-Busch InBev and Heineken

0.81

Correlation Coefficient

Anheuser-Busch InBev  Heineken

Very poor diversification

The 3 months correlation between Anheuser-Busch and Heineken is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch InBev SANV and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and Anheuser-Busch InBev 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 SANV are associated (or correlated) with Heineken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken NV has no effect on the direction of Anheuser-Busch InBev i.e., Anheuser-Busch InBev and Heineken go up and down completely randomly.

Pair Corralation between Anheuser-Busch InBev and Heineken

Assuming the 90 days horizon Anheuser Busch InBev SANV is expected to under-perform the Heineken. But the pink sheet apears to be less risky and, when comparing its historical volatility, Anheuser Busch InBev SANV is 1.51 times less risky than Heineken. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Heineken NV is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,770  in Heineken NV on November 19, 2024 and sell it today you would earn a total of  392.00  from holding Heineken NV or generate 10.4% 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 SANV  vs.  Heineken NV

Anheuser Busch InBev

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anheuser Busch InBev SANV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Anheuser-Busch InBev is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Heineken NV

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Heineken NV are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Heineken may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Anheuser-Busch InBev and Heineken

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

The idea behind Anheuser Busch InBev SANV and Heineken 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.