Correlation Between Anheuser Busch and ConAgra Foods
Can any of the company-specific risk be diversified away by investing in both Anheuser Busch and ConAgra Foods 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 ConAgra Foods 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 ConAgra Foods, you can compare the effects of market volatilities on Anheuser Busch and ConAgra Foods 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 ConAgra Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser Busch and ConAgra Foods.
Diversification Opportunities for Anheuser Busch and ConAgra Foods
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Anheuser and ConAgra is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and ConAgra Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConAgra Foods 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 ConAgra Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConAgra Foods has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and ConAgra Foods go up and down completely randomly.
Pair Corralation between Anheuser Busch and ConAgra Foods
Considering the 90-day investment horizon Anheuser Busch Inbev is expected to under-perform the ConAgra Foods. But the stock apears to be less risky and, when comparing its historical volatility, Anheuser Busch Inbev is 1.69 times less risky than ConAgra Foods. The stock trades about 0.0 of its potential returns per unit of risk. The ConAgra Foods is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,891 in ConAgra Foods on January 26, 2024 and sell it today you would earn a total of 266.00 from holding ConAgra Foods or generate 9.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Anheuser Busch Inbev vs. ConAgra Foods
Performance |
Timeline |
Anheuser Busch Inbev |
ConAgra Foods |
Anheuser Busch and ConAgra Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Anheuser Busch and ConAgra Foods
The main advantage of trading using opposite Anheuser Busch and ConAgra Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anheuser Busch position performs unexpectedly, ConAgra Foods 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 ConAgra Foods will offset losses from the drop in ConAgra Foods' long position.Anheuser Busch vs. Fomento Economico Mexicano | Anheuser Busch vs. Carlsberg AS | Anheuser Busch vs. Molson Coors Beverage | Anheuser Busch vs. Heineken NV |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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