Correlation Between Budweiser Brewing and Heineken
Can any of the company-specific risk be diversified away by investing in both Budweiser Brewing 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 Budweiser Brewing and Heineken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Budweiser Brewing and Heineken NV, you can compare the effects of market volatilities on Budweiser Brewing 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 Budweiser Brewing with a short position of Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Budweiser Brewing and Heineken.
Diversification Opportunities for Budweiser Brewing and Heineken
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Budweiser and Heineken is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Budweiser Brewing and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and Budweiser Brewing 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 Budweiser Brewing 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 NV has no effect on the direction of Budweiser Brewing i.e., Budweiser Brewing and Heineken go up and down completely randomly.
Pair Corralation between Budweiser Brewing and Heineken
Assuming the 90 days horizon Budweiser Brewing is expected to under-perform the Heineken. In addition to that, Budweiser Brewing is 2.78 times more volatile than Heineken NV. It trades about -0.08 of its total potential returns per unit of risk. Heineken NV is currently generating about -0.14 per unit of volatility. If you would invest 3,553 in Heineken NV on October 21, 2024 and sell it today you would lose (142.00) from holding Heineken NV or give up 4.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Budweiser Brewing vs. Heineken NV
Performance |
| Timeline |
| Budweiser Brewing |
| Heineken NV |
Budweiser Brewing and Heineken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Budweiser Brewing and Heineken
The main advantage of trading using opposite Budweiser Brewing and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Budweiser Brewing 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.| Budweiser Brewing vs. Anheuser Busch InBev SANV | Budweiser Brewing vs. Anheuser Busch Inbev | Budweiser Brewing vs. Molson Coors Brewing | Budweiser Brewing vs. Heineken NV |
| Heineken vs. Anheuser Busch InBev SANV | Heineken vs. Tsingtao Brewery Co | Heineken vs. Carlsberg AS | Heineken vs. Heineken Holding 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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