Correlation Between UBM Development and Anheuser Busch

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

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

Diversification Opportunities for UBM Development and Anheuser Busch

0.35

Correlation Coefficient

UBM Development  Anheuser Busch

Weak diversification

The 3 months correlation between UBM and Anheuser is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding UBM Development AG 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 UBM Development 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 UBM Development AG 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 UBM Development i.e., UBM Development and Anheuser Busch go up and down completely randomly.

Pair Corralation between UBM Development and Anheuser Busch

Assuming the 90 days trading horizon UBM Development is expected to generate 1.05 times less return on investment than Anheuser Busch. But when comparing it to its historical volatility, UBM Development AG is 1.11 times less risky than Anheuser Busch. It trades about 0.22 of its potential returns per unit of risk. Anheuser Busch InBev SANV is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4,867  in Anheuser Busch InBev SANV on December 2, 2024 and sell it today you would earn a total of  773.00  from holding Anheuser Busch InBev SANV or generate 15.88% return on investment over 90 days.

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

UBM Development AG  vs.  Anheuser Busch InBev SANV

UBM Development AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UBM Development AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, UBM Development demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Anheuser Busch InBev

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anheuser Busch InBev SANV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Anheuser Busch may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with UBM Development and Anheuser Busch

The main advantage of trading using opposite UBM Development and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBM Development 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 UBM Development AG 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.