Correlation Between Westrock Coffee and Anheuser Busch

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

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

Diversification Opportunities for Westrock Coffee and Anheuser Busch

0.44

Correlation Coefficient

Westrock Coffee  Anheuser Busch

Very weak diversification

The 3 months correlation between Westrock and Anheuser is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee 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 Westrock Coffee 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 Westrock Coffee 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 Westrock Coffee i.e., Westrock Coffee and Anheuser Busch go up and down completely randomly.

Pair Corralation between Westrock Coffee and Anheuser Busch

Given the investment horizon of 90 days Westrock Coffee is expected to under-perform the Anheuser Busch. In addition to that, Westrock Coffee is 1.94 times more volatile than Anheuser Busch Inbev. It trades about -0.13 of its total potential returns per unit of risk. Anheuser Busch Inbev is currently generating about 0.1 per unit of volatility. If you would invest  5,380  in Anheuser Busch Inbev on November 29, 2024 and sell it today you would earn a total of  492.00  from holding Anheuser Busch Inbev or generate 9.14% return on investment over 90 days.

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

Westrock Coffee  vs.  Anheuser Busch Inbev

Westrock Coffee

Risk-Adjusted Performance

Very Weak

Over the last 90 days Westrock Coffee has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Anheuser Busch Inbev

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anheuser Busch Inbev are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Anheuser Busch may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Westrock Coffee and Anheuser Busch

The main advantage of trading using opposite Westrock Coffee and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westrock Coffee 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 Westrock Coffee 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.