Correlation Between Four Seasons and Anheuser Busch

Can any of the company-specific risk be diversified away by investing in both Four Seasons and Anheuser Busch 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 Four Seasons and Anheuser Busch into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Four Seasons Education and Anheuser Busch Inbev, you can compare the effects of market volatilities on Four Seasons and Anheuser Busch 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 Four Seasons with a short position of Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Four Seasons and Anheuser Busch.

Diversification Opportunities for Four Seasons and Anheuser Busch

0.46

Correlation Coefficient

Four Seasons  Anheuser Busch

Very weak diversification

The 3 months correlation between Four and Anheuser is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Four Seasons Education and Anheuser Busch Inbev in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch Inbev and Four Seasons 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 Four Seasons Education are associated (or correlated) with Anheuser Busch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anheuser Busch Inbev has no effect on the direction of Four Seasons i.e., Four Seasons and Anheuser Busch go up and down completely randomly.

Pair Corralation between Four Seasons and Anheuser Busch

Given the investment horizon of 90 days Four Seasons Education is expected to generate 49.96 times more return on investment than Anheuser Busch. However, Four Seasons is 49.96 times more volatile than Anheuser Busch Inbev. It trades about 0.06 of its potential returns per unit of risk. Anheuser Busch Inbev is currently generating about -0.01 per unit of risk. If you would invest  1,007  in Four Seasons Education on September 12, 2024 and sell it today you would earn a total of  128.00  from holding Four Seasons Education or generate 12.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	76.13%
Values	Daily Returns

Four Seasons Education  vs.  Anheuser Busch Inbev

Four Seasons Education

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Four Seasons Education are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Four Seasons is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Four Seasons and Anheuser Busch

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

The idea behind Four Seasons Education and Anheuser Busch Inbev 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.