Correlation Between Heineken and Anheuser Busch

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

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

Diversification Opportunities for Heineken and Anheuser Busch

0.82

Correlation Coefficient

Heineken  Anheuser Busch

Very poor diversification

The 3 months correlation between Heineken and Anheuser is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Heineken NV 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 Heineken 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 Heineken NV 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 Heineken i.e., Heineken and Anheuser Busch go up and down completely randomly.

Pair Corralation between Heineken and Anheuser Busch

Assuming the 90 days horizon Heineken NV is expected to under-perform the Anheuser Busch. But the otc stock apears to be less risky and, when comparing its historical volatility, Heineken NV is 1.09 times less risky than Anheuser Busch. The otc stock trades about -0.02 of its potential returns per unit of risk. The Anheuser Busch InBev SANV is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5,900  in Anheuser Busch InBev SANV on December 3, 2024 and sell it today you would earn a total of  65.00  from holding Anheuser Busch InBev SANV or generate 1.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.59%
Values	Daily Returns

Heineken NV  vs.  Anheuser Busch InBev SANV

Heineken NV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heineken NV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Heineken showed solid returns over the last few months and may actually be approaching a breakup point.

Anheuser Busch InBev

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anheuser Busch InBev SANV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Anheuser Busch may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Heineken and Anheuser Busch

The main advantage of trading using opposite Heineken and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heineken 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 Heineken NV 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..