Correlation Between Akzo Nobel and Heineken Holding
Can any of the company-specific risk be diversified away by investing in both Akzo Nobel and Heineken Holding 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 Holding 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 Holding NV, you can compare the effects of market volatilities on Akzo Nobel and Heineken Holding 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 Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akzo Nobel and Heineken Holding.
Diversification Opportunities for Akzo Nobel and Heineken Holding
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Akzo and Heineken is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Akzo Nobel NV and Heineken Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Holding 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 Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken Holding has no effect on the direction of Akzo Nobel i.e., Akzo Nobel and Heineken Holding go up and down completely randomly.
Pair Corralation between Akzo Nobel and Heineken Holding
Assuming the 90 days trading horizon Akzo Nobel NV is expected to generate 1.4 times more return on investment than Heineken Holding. However, Akzo Nobel is 1.4 times more volatile than Heineken Holding NV. It trades about -0.2 of its potential returns per unit of risk. Heineken Holding NV is currently generating about -0.35 per unit of risk. If you would invest 5,872 in Akzo Nobel NV on August 31, 2024 and sell it today you would lose (356.00) from holding Akzo Nobel NV or give up 6.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Akzo Nobel NV vs. Heineken Holding NV
Performance |
| Timeline |
| Akzo Nobel NV |
| Heineken Holding |
Akzo Nobel and Heineken Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akzo Nobel and Heineken Holding
The main advantage of trading using opposite Akzo Nobel and Heineken Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akzo Nobel position performs unexpectedly, Heineken Holding 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 Holding will offset losses from the drop in Heineken Holding'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 Holding vs. Heineken | Heineken Holding vs. Wolters Kluwer NV | Heineken Holding vs. Akzo Nobel NV | Heineken Holding vs. Aalberts Industries NV |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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