Correlation Between Flexible Solutions and Anheuser Busch
Can any of the company-specific risk be diversified away by investing in both Flexible Solutions 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 Flexible Solutions and Anheuser Busch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexible Solutions International and Anheuser Busch Inbev, you can compare the effects of market volatilities on Flexible Solutions 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 Flexible Solutions with a short position of Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and Anheuser Busch.
Diversification Opportunities for Flexible Solutions and Anheuser Busch
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flexible and Anheuser is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation 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 Flexible Solutions 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 Flexible Solutions International 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 Flexible Solutions i.e., Flexible Solutions and Anheuser Busch go up and down completely randomly.
Pair Corralation between Flexible Solutions and Anheuser Busch
Considering the 90-day investment horizon Flexible Solutions International is expected to under-perform the Anheuser Busch. In addition to that, Flexible Solutions is 1.74 times more volatile than Anheuser Busch Inbev. It trades about -0.29 of its total potential returns per unit of risk. Anheuser Busch Inbev is currently generating about -0.36 per unit of volatility. If you would invest 5,473 in Anheuser Busch Inbev on September 23, 2024 and sell it today you would lose (452.00) from holding Anheuser Busch Inbev or give up 8.26% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Flexible Solutions Internation vs. Anheuser Busch Inbev
Performance |
Timeline |
Flexible Solutions |
Anheuser Busch Inbev |
Flexible Solutions and Anheuser Busch Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Flexible Solutions and Anheuser Busch
The main advantage of trading using opposite Flexible Solutions and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions 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.Flexible Solutions vs. LyondellBasell Industries NV | Flexible Solutions vs. Cabot | Flexible Solutions vs. Westlake Chemical | Flexible Solutions vs. Air Products and |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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