Correlation Between ConAgra Foods and Anheuser Busch

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Can any of the company-specific risk be diversified away by investing in both ConAgra Foods 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 ConAgra Foods and Anheuser Busch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConAgra Foods and Anheuser Busch Inbev, you can compare the effects of market volatilities on ConAgra Foods 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 ConAgra Foods with a short position of Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConAgra Foods and Anheuser Busch.

Diversification Opportunities for ConAgra Foods and Anheuser Busch

-0.13
  Correlation Coefficient

Good diversification

The 3 months correlation between ConAgra and Anheuser is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding ConAgra Foods 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 ConAgra Foods 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 ConAgra Foods 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 ConAgra Foods i.e., ConAgra Foods and Anheuser Busch go up and down completely randomly.

Pair Corralation between ConAgra Foods and Anheuser Busch

Considering the 90-day investment horizon ConAgra Foods is expected to under-perform the Anheuser Busch. But the stock apears to be less risky and, when comparing its historical volatility, ConAgra Foods is 1.14 times less risky than Anheuser Busch. The stock trades about -0.01 of its potential returns per unit of risk. The Anheuser Busch Inbev is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5,732  in Anheuser Busch Inbev on December 30, 2023 and sell it today you would earn a total of  346.00  from holding Anheuser Busch Inbev or generate 6.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

ConAgra Foods  vs.  Anheuser Busch Inbev

 Performance 
       Timeline  
ConAgra Foods 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in ConAgra Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ConAgra Foods is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
Anheuser Busch Inbev 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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.

ConAgra Foods and Anheuser Busch Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ConAgra Foods and Anheuser Busch

The main advantage of trading using opposite ConAgra Foods and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConAgra Foods 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 ConAgra Foods 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.
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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