Correlation Between Kraft Heinz and Anheuser Busch

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

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

Diversification Opportunities for Kraft Heinz and Anheuser Busch

0.87

Correlation Coefficient

Kraft Heinz  Anheuser Busch

Very poor diversification

The 3 months correlation between Kraft and Anheuser is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and Anheuser Busch Inbev in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch Inbev and Kraft Heinz 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 Kraft Heinz Co 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 Kraft Heinz i.e., Kraft Heinz and Anheuser Busch go up and down completely randomly.

Pair Corralation between Kraft Heinz and Anheuser Busch

Considering the 90-day investment horizon Kraft Heinz Co is expected to generate 0.79 times more return on investment than Anheuser Busch. However, Kraft Heinz Co is 1.27 times less risky than Anheuser Busch. It trades about -0.16 of its potential returns per unit of risk. Anheuser Busch Inbev is currently generating about -0.15 per unit of risk. If you would invest  3,543  in Kraft Heinz Co on August 30, 2024 and sell it today you would lose (350.00) from holding Kraft Heinz Co or give up 9.88% of portfolio value over 90 days.

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

Kraft Heinz Co  vs.  Anheuser Busch Inbev

Kraft Heinz

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kraft Heinz Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Anheuser Busch Inbev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anheuser Busch Inbev has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Kraft Heinz and Anheuser Busch

The main advantage of trading using opposite Kraft Heinz and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kraft Heinz 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 Kraft Heinz Co and Anheuser Busch Inbev 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.