Correlation Between Anheuser Busch and Century Aluminum
Can any of the company-specific risk be diversified away by investing in both Anheuser Busch and Century Aluminum 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 Century Aluminum 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 Century Aluminum, you can compare the effects of market volatilities on Anheuser Busch and Century Aluminum 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 Century Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser Busch and Century Aluminum.
Diversification Opportunities for Anheuser Busch and Century Aluminum
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Anheuser and Century is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and Century Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Aluminum 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 Century Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Aluminum has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and Century Aluminum go up and down completely randomly.
Pair Corralation between Anheuser Busch and Century Aluminum
Considering the 90-day investment horizon Anheuser Busch Inbev is expected to under-perform the Century Aluminum. But the stock apears to be less risky and, when comparing its historical volatility, Anheuser Busch Inbev is 2.69 times less risky than Century Aluminum. The stock trades about -0.06 of its potential returns per unit of risk. The Century Aluminum is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,553 in Century Aluminum on January 31, 2024 and sell it today you would earn a total of 245.00 from holding Century Aluminum or generate 15.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Anheuser Busch Inbev vs. Century Aluminum
Performance |
Timeline |
Anheuser Busch Inbev |
Century Aluminum |
Anheuser Busch and Century Aluminum Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Anheuser Busch and Century Aluminum
The main advantage of trading using opposite Anheuser Busch and Century Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anheuser Busch position performs unexpectedly, Century Aluminum 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 Century Aluminum will offset losses from the drop in Century Aluminum's long position.Anheuser Busch vs. Fomento Economico Mexicano | Anheuser Busch vs. Tsingtao Brewery Co | Anheuser Busch vs. Carlsberg AS | Anheuser Busch vs. Heineken NV |
Century Aluminum vs. Kaiser Aluminum | Century Aluminum vs. Commercial Metals | Century Aluminum vs. Steel Dynamics | Century Aluminum vs. Reliance Steel Aluminum |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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