Correlation Between Stag Industrial and Anheuser-Busch InBev

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

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

Diversification Opportunities for Stag Industrial and Anheuser-Busch InBev

0.54

Correlation Coefficient

Stag Industrial  Anheuser-Busch InBev

Very weak diversification

The 3 months correlation between Stag and Anheuser-Busch is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Stag Industrial 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 Stag Industrial 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 Stag Industrial are associated (or correlated) with Anheuser-Busch InBev. 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 Stag Industrial i.e., Stag Industrial and Anheuser-Busch InBev go up and down completely randomly.

Pair Corralation between Stag Industrial and Anheuser-Busch InBev

Assuming the 90 days trading horizon Stag Industrial is expected to generate 15.96 times less return on investment than Anheuser-Busch InBev. But when comparing it to its historical volatility, Stag Industrial is 1.78 times less risky than Anheuser-Busch InBev. It trades about 0.02 of its potential returns per unit of risk. Anheuser Busch InBev SANV is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  4,815  in Anheuser Busch InBev SANV on December 22, 2024 and sell it today you would earn a total of  985.00  from holding Anheuser Busch InBev SANV or generate 20.46% return on investment over 90 days.

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

Stag Industrial  vs.  Anheuser Busch InBev SANV

Stag Industrial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stag Industrial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Stag Industrial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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. In spite of comparatively fragile basic indicators, Anheuser-Busch InBev unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stag Industrial and Anheuser-Busch InBev

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

The idea behind Stag Industrial 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.