Correlation Between Volkswagen and Anheuser Busch
Can any of the company-specific risk be diversified away by investing in both Volkswagen 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 Volkswagen and Anheuser Busch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Anheuser Busch InBev SANV, you can compare the effects of market volatilities on Volkswagen 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 Volkswagen with a short position of Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Anheuser Busch.
Diversification Opportunities for Volkswagen and Anheuser Busch
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Volkswagen and Anheuser is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen 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 Volkswagen 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 Volkswagen 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 Volkswagen i.e., Volkswagen and Anheuser Busch go up and down completely randomly.
Pair Corralation between Volkswagen and Anheuser Busch
Assuming the 90 days horizon Volkswagen AG is expected to generate 1.41 times more return on investment than Anheuser Busch. However, Volkswagen is 1.41 times more volatile than Anheuser Busch InBev SANV. It trades about -0.08 of its potential returns per unit of risk. Anheuser Busch InBev SANV is currently generating about -0.28 per unit of risk. If you would invest 9,705 in Volkswagen AG on October 8, 2024 and sell it today you would lose (880.00) from holding Volkswagen AG or give up 9.07% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Volkswagen AG vs. Anheuser Busch InBev SANV
Performance |
Timeline |
Volkswagen AG |
Anheuser Busch InBev |
Volkswagen and Anheuser Busch Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Volkswagen and Anheuser Busch
The main advantage of trading using opposite Volkswagen and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen 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.Volkswagen vs. REINET INVESTMENTS SCA | Volkswagen vs. SLR Investment Corp | Volkswagen vs. CDL INVESTMENT | Volkswagen vs. Chongqing Machinery Electric |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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