Correlation Between Valero Energy and Anheuser Busch

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

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

Diversification Opportunities for Valero Energy and Anheuser Busch

-0.55

Correlation Coefficient

Valero Energy  Anheuser Busch

Excellent diversification

The 3 months correlation between Valero and Anheuser is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Valero Energy Corp 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 Valero Energy 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 Valero Energy Corp 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 Valero Energy i.e., Valero Energy and Anheuser Busch go up and down completely randomly.

Pair Corralation between Valero Energy and Anheuser Busch

Assuming the 90 days trading horizon Valero Energy is expected to generate 2.04 times less return on investment than Anheuser Busch. In addition to that, Valero Energy is 1.22 times more volatile than Anheuser Busch InBev SANV. It trades about 0.07 of its total potential returns per unit of risk. Anheuser Busch InBev SANV is currently generating about 0.17 per unit of volatility. If you would invest  4,852  in Anheuser Busch InBev SANV on December 25, 2024 and sell it today you would earn a total of  852.00  from holding Anheuser Busch InBev SANV or generate 17.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Valero Energy Corp  vs.  Anheuser Busch InBev SANV

Valero Energy Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Valero Energy Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Valero Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Anheuser Busch sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Valero Energy and Anheuser Busch

The main advantage of trading using opposite Valero Energy and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valero Energy 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 Valero Energy Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.