Correlation Between Anheuser Busch and Kellanova

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

Diversification Opportunities for Anheuser Busch and Kellanova

-0.39

Correlation Coefficient

Anheuser Busch  Kellanova

Very good diversification

The 3 months correlation between Anheuser and Kellanova is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova 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 Kellanova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellanova has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and Kellanova go up and down completely randomly.

Pair Corralation between Anheuser Busch and Kellanova

Considering the 90-day investment horizon Anheuser Busch is expected to generate 8.51 times less return on investment than Kellanova. But when comparing it to its historical volatility, Anheuser Busch Inbev is 1.93 times less risky than Kellanova. It trades about 0.03 of its potential returns per unit of risk. Kellanova is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5,748  in Kellanova on February 7, 2024 and sell it today you would earn a total of  256.00  from holding Kellanova or generate 4.45% 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.  Kellanova

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 latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Kellanova

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Kellanova may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Anheuser Busch and Kellanova

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

The idea behind Anheuser Busch Inbev and Kellanova 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.