Correlation Between Anheuser Busch and Betterware

Can any of the company-specific risk be diversified away by investing in both Anheuser Busch and Betterware 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 Betterware 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 Betterware De Mexico, you can compare the effects of market volatilities on Anheuser Busch and Betterware 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 Betterware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser Busch and Betterware.

Diversification Opportunities for Anheuser Busch and Betterware

-0.71

Correlation Coefficient

Anheuser Busch  Betterware

Pay attention - limited upside

The 3 months correlation between Anheuser and Betterware is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and Betterware De Mexico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betterware De Mexico 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 Betterware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betterware De Mexico has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and Betterware go up and down completely randomly.

Pair Corralation between Anheuser Busch and Betterware

Considering the 90-day investment horizon Anheuser Busch Inbev is expected to generate 0.37 times more return on investment than Betterware. However, Anheuser Busch Inbev is 2.68 times less risky than Betterware. It trades about 0.01 of its potential returns per unit of risk. Betterware De Mexico is currently generating about -0.03 per unit of risk. If you would invest  5,973  in Anheuser Busch Inbev on February 5, 2024 and sell it today you would lose (2.00) from holding Anheuser Busch Inbev or give up 0.03% of portfolio value over 90 days.

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

Anheuser Busch Inbev  vs.  Betterware De Mexico

Anheuser Busch Inbev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anheuser Busch Inbev has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Anheuser Busch is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Betterware De Mexico

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Betterware De Mexico are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Betterware showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anheuser Busch and Betterware

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

The idea behind Anheuser Busch Inbev and Betterware De Mexico 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.

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.