Correlation Between Walmart and ANHEUSER

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

By analyzing existing cross correlation between Walmart and ANHEUSER BUSCH INBEV WORLDWIDE, you can compare the effects of market volatilities on Walmart and ANHEUSER 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 Walmart with a short position of ANHEUSER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and ANHEUSER.

Diversification Opportunities for Walmart and ANHEUSER

-0.67

Correlation Coefficient

Walmart  ANHEUSER

Excellent diversification

The 3 months correlation between Walmart and ANHEUSER is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and ANHEUSER BUSCH INBEV WORLDWIDE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANHEUSER BUSCH INBEV and Walmart 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 Walmart are associated (or correlated) with ANHEUSER. 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 Walmart i.e., Walmart and ANHEUSER go up and down completely randomly.

Pair Corralation between Walmart and ANHEUSER

Considering the 90-day investment horizon Walmart is expected to generate 14.47 times less return on investment than ANHEUSER. In addition to that, Walmart is 1.27 times more volatile than ANHEUSER BUSCH INBEV WORLDWIDE. It trades about 0.02 of its total potential returns per unit of risk. ANHEUSER BUSCH INBEV WORLDWIDE is currently generating about 0.31 per unit of volatility. If you would invest  8,783  in ANHEUSER BUSCH INBEV WORLDWIDE on November 28, 2024 and sell it today you would earn a total of  725.00  from holding ANHEUSER BUSCH INBEV WORLDWIDE or generate 8.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	76.19%
Values	Daily Returns

Walmart  vs.  ANHEUSER BUSCH INBEV WORLDWIDE

Walmart

Risk-Adjusted Performance

Modest

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

ANHEUSER BUSCH INBEV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ANHEUSER BUSCH INBEV WORLDWIDE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ANHEUSER is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walmart and ANHEUSER

The main advantage of trading using opposite Walmart and ANHEUSER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, ANHEUSER 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 will offset losses from the drop in ANHEUSER's long position.

The idea behind Walmart and ANHEUSER BUSCH INBEV WORLDWIDE 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.