Correlation Between Akzo Nobel and Heineken
Can any of the company-specific risk be diversified away by investing in both Akzo Nobel and Heineken 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 Akzo Nobel and Heineken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akzo Nobel NV and Heineken, you can compare the effects of market volatilities on Akzo Nobel and Heineken 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 Akzo Nobel with a short position of Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akzo Nobel and Heineken.
Diversification Opportunities for Akzo Nobel and Heineken
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Akzo and Heineken is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Akzo Nobel NV and Heineken in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken and Akzo Nobel 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 Akzo Nobel NV are associated (or correlated) with Heineken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken has no effect on the direction of Akzo Nobel i.e., Akzo Nobel and Heineken go up and down completely randomly.
Pair Corralation between Akzo Nobel and Heineken
Assuming the 90 days trading horizon Akzo Nobel NV is expected to generate 1.35 times more return on investment than Heineken. However, Akzo Nobel is 1.35 times more volatile than Heineken. It trades about -0.21 of its potential returns per unit of risk. Heineken is currently generating about -0.57 per unit of risk. If you would invest 5,970 in Akzo Nobel NV on August 28, 2024 and sell it today you would lose (350.00) from holding Akzo Nobel NV or give up 5.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Akzo Nobel NV vs. Heineken
Performance |
| Timeline |
| Akzo Nobel NV |
| Heineken |
Akzo Nobel and Heineken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akzo Nobel and Heineken
The main advantage of trading using opposite Akzo Nobel and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akzo Nobel position performs unexpectedly, Heineken 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 Heineken will offset losses from the drop in Heineken's long position.| Akzo Nobel vs. Randstad NV | Akzo Nobel vs. Koninklijke Philips NV | Akzo Nobel vs. Koninklijke KPN NV | Akzo Nobel vs. Aegon NV |
| Heineken vs. Unilever PLC | Heineken vs. Koninklijke Philips NV | Heineken vs. Akzo Nobel NV | Heineken vs. Koninklijke Ahold Delhaize |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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