Correlation Between GM and Anheuser Busch

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

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

Diversification Opportunities for GM and Anheuser Busch

0.0

Correlation Coefficient

GM  Anheuser Busch

Pay attention - limited upside

The 3 months correlation between GM and Anheuser is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors 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 GM 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 General Motors 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 GM i.e., GM and Anheuser Busch go up and down completely randomly.

Pair Corralation between GM and Anheuser Busch

If you would invest  0.00  in Anheuser Busch InBev SANV on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Anheuser Busch InBev SANV or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

General Motors  vs.  Anheuser Busch InBev SANV

General Motors

Risk-Adjusted Performance

Very Weak

Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Anheuser Busch InBev

Risk-Adjusted Performance

Good

Over the last 90 days Anheuser Busch InBev SANV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Anheuser Busch is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with GM and Anheuser Busch

The main advantage of trading using opposite GM and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.