Correlation Between RBACN and Anheuser Busch

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

By analyzing existing cross correlation between RBACN 675 15 MAR 28 and Anheuser Busch Inbev, you can compare the effects of market volatilities on RBACN 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 RBACN with a short position of Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBACN and Anheuser Busch.

Diversification Opportunities for RBACN and Anheuser Busch

0.42

Correlation Coefficient

RBACN  Anheuser Busch

Very weak diversification

The 3 months correlation between RBACN and Anheuser is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding RBACN 675 15 MAR 28 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 RBACN 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 RBACN 675 15 MAR 28 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 RBACN i.e., RBACN and Anheuser Busch go up and down completely randomly.

Pair Corralation between RBACN and Anheuser Busch

Assuming the 90 days trading horizon RBACN 675 15 MAR 28 is expected to generate 0.27 times more return on investment than Anheuser Busch. However, RBACN 675 15 MAR 28 is 3.74 times less risky than Anheuser Busch. It trades about -0.17 of its potential returns per unit of risk. Anheuser Busch Inbev is currently generating about -0.36 per unit of risk. If you would invest  10,355  in RBACN 675 15 MAR 28 on September 28, 2024 and sell it today you would lose (305.00) from holding RBACN 675 15 MAR 28 or give up 2.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

RBACN 675 15 MAR 28  vs.  Anheuser Busch Inbev

RBACN 675 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RBACN 675 15 MAR 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, RBACN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with RBACN and Anheuser Busch

The main advantage of trading using opposite RBACN and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBACN 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 RBACN 675 15 MAR 28 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.

Check out your portfolio center.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.