Correlation Between Anheuser Busch and MOLSON RS

Can any of the company-specific risk be diversified away by investing in both Anheuser Busch and MOLSON RS 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 and MOLSON RS 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 MOLSON RS BEVERAGE, you can compare the effects of market volatilities on Anheuser Busch and MOLSON RS 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 with a short position of MOLSON RS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser Busch and MOLSON RS.

Diversification Opportunities for Anheuser Busch and MOLSON RS

0.86

Correlation Coefficient

Anheuser Busch  MOLSON RS

Very poor diversification

The 3 months correlation between Anheuser and MOLSON is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch InBev SANV and MOLSON RS BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOLSON RS BEVERAGE and Anheuser Busch 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 MOLSON RS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOLSON RS BEVERAGE has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and MOLSON RS go up and down completely randomly.

Pair Corralation between Anheuser Busch and MOLSON RS

Assuming the 90 days trading horizon Anheuser Busch InBev SANV is expected to generate 0.55 times more return on investment than MOLSON RS. However, Anheuser Busch InBev SANV is 1.81 times less risky than MOLSON RS. It trades about 0.16 of its potential returns per unit of risk. MOLSON RS BEVERAGE is currently generating about 0.07 per unit of risk. If you would invest  4,780  in Anheuser Busch InBev SANV on December 31, 2024 and sell it today you would earn a total of  920.00  from holding Anheuser Busch InBev SANV or generate 19.25% 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.  MOLSON RS BEVERAGE

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 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward-looking signals, Anheuser Busch reported solid returns over the last few months and may actually be approaching a breakup point.

MOLSON RS BEVERAGE

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MOLSON RS BEVERAGE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, MOLSON RS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anheuser Busch and MOLSON RS

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

The idea behind Anheuser Busch InBev SANV and MOLSON RS BEVERAGE 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.