Correlation Between Anheuser Busch and Air Products
Can any of the company-specific risk be diversified away by investing in both Anheuser Busch and Air Products 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 Anheuser Busch and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anheuser Busch Inbev and Air Products and, you can compare the effects of market volatilities on Anheuser Busch and Air Products 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 Anheuser Busch with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser Busch and Air Products.
Diversification Opportunities for Anheuser Busch and Air Products
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Anheuser and Air is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and Anheuser Busch 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 Anheuser Busch Inbev are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and Air Products go up and down completely randomly.
Pair Corralation between Anheuser Busch and Air Products
Considering the 90-day investment horizon Anheuser Busch Inbev is expected to generate 0.84 times more return on investment than Air Products. However, Anheuser Busch Inbev is 1.19 times less risky than Air Products. It trades about 0.02 of its potential returns per unit of risk. Air Products and is currently generating about 0.01 per unit of risk. If you would invest 5,531 in Anheuser Busch Inbev on January 20, 2024 and sell it today you would earn a total of 343.00 from holding Anheuser Busch Inbev or generate 6.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anheuser Busch Inbev vs. Air Products and
Performance |
| Timeline |
| Anheuser Busch Inbev |
| Air Products |
Anheuser Busch and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anheuser Busch and Air Products
The main advantage of trading using opposite Anheuser Busch and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anheuser Busch position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Anheuser Busch vs. Molson Coors Beverage | Anheuser Busch vs. Heineken NV | Anheuser Busch vs. Budweiser Brewing | Anheuser Busch vs. Anheuser Busch InBev SANV |
| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
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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