Correlation Between Hermès International and Anheuser Busch

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

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

Diversification Opportunities for Hermès International and Anheuser Busch

0.18

Correlation Coefficient

Hermès International  Anheuser Busch

Average diversification

The 3 months correlation between Hermès and Anheuser is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Herms International Socit 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 Hermès International 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 Herms International Socit 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 Hermès International i.e., Hermès International and Anheuser Busch go up and down completely randomly.

Pair Corralation between Hermès International and Anheuser Busch

Assuming the 90 days horizon Herms International Socit is expected to generate 1.37 times more return on investment than Anheuser Busch. However, Hermès International is 1.37 times more volatile than Anheuser Busch InBev SANV. It trades about 0.05 of its potential returns per unit of risk. Anheuser Busch InBev SANV is currently generating about 0.02 per unit of risk. If you would invest  170,588  in Herms International Socit on December 24, 2024 and sell it today you would earn a total of  79,012  from holding Herms International Socit or generate 46.32% return on investment over 90 days.

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

Herms International Socit  vs.  Anheuser Busch InBev SANV

Herms International Socit

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Herms International Socit are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Hermès International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Anheuser Busch InBev

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Anheuser Busch InBev SANV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Anheuser Busch sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hermès International and Anheuser Busch

The main advantage of trading using opposite Hermès International and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hermès International 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 Herms International Socit 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.