Correlation Between Sempra and Anheuser Busch

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

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

Diversification Opportunities for Sempra and Anheuser Busch

-0.47

Correlation Coefficient

Sempra  Anheuser Busch

Very good diversification

The 3 months correlation between Sempra and Anheuser is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sempra 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 Sempra 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 Sempra 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 Sempra i.e., Sempra and Anheuser Busch go up and down completely randomly.

Pair Corralation between Sempra and Anheuser Busch

Assuming the 90 days horizon Sempra is expected to generate 1.13 times more return on investment than Anheuser Busch. However, Sempra is 1.13 times more volatile than Anheuser Busch InBev SANV. It trades about 0.14 of its potential returns per unit of risk. Anheuser Busch InBev SANV is currently generating about -0.09 per unit of risk. If you would invest  6,795  in Sempra on October 7, 2024 and sell it today you would earn a total of  1,721  from holding Sempra or generate 25.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sempra  vs.  Anheuser Busch InBev SANV

Sempra

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sempra are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Sempra reported solid returns over the last few months and may actually be approaching a breakup point.

Anheuser Busch InBev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anheuser Busch InBev SANV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sempra and Anheuser Busch

The main advantage of trading using opposite Sempra and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempra 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 Sempra 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.