Correlation Between Erste Group and Anheuser Busch

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

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

Diversification Opportunities for Erste Group and Anheuser Busch

-0.72

Correlation Coefficient

Erste Group  Anheuser Busch

Pay attention - limited upside

The 3 months correlation between Erste and Anheuser is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Anheuser Busch InBev SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch InBev and Erste Group 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 Erste Group Bank are associated (or correlated) with Anheuser Busch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anheuser Busch InBev has no effect on the direction of Erste Group i.e., Erste Group and Anheuser Busch go up and down completely randomly.

Pair Corralation between Erste Group and Anheuser Busch

Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.86 times more return on investment than Anheuser Busch. However, Erste Group Bank is 1.16 times less risky than Anheuser Busch. It trades about 0.09 of its potential returns per unit of risk. Anheuser Busch InBev SANV is currently generating about -0.09 per unit of risk. If you would invest  4,853  in Erste Group Bank on September 3, 2024 and sell it today you would earn a total of  337.00  from holding Erste Group Bank or generate 6.94% return on investment over 90 days.

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

Erste Group Bank  vs.  Anheuser Busch InBev SANV

Erste Group Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Erste Group Bank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Erste Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Anheuser Busch InBev

Risk-Adjusted Performance

0 of 100

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 latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Erste Group and Anheuser Busch

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

The idea behind Erste Group Bank and Anheuser Busch InBev SANV 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.