Correlation Between BWX Technologies and Heineken
Can any of the company-specific risk be diversified away by investing in both BWX Technologies 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 BWX Technologies and Heineken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BWX Technologies and Heineken NV, you can compare the effects of market volatilities on BWX Technologies 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 BWX Technologies with a short position of Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of BWX Technologies and Heineken.
Diversification Opportunities for BWX Technologies and Heineken
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between BWX and Heineken is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding BWX Technologies and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and BWX Technologies 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 BWX Technologies 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 BWX Technologies i.e., BWX Technologies and Heineken go up and down completely randomly.
Pair Corralation between BWX Technologies and Heineken
Given the investment horizon of 90 days BWX Technologies is expected to under-perform the Heineken. In addition to that, BWX Technologies is 1.05 times more volatile than Heineken NV. It trades about -0.19 of its total potential returns per unit of risk. Heineken NV is currently generating about 0.38 per unit of volatility. If you would invest 6,623 in Heineken NV on November 18, 2024 and sell it today you would earn a total of 1,741 from holding Heineken NV or generate 26.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BWX Technologies vs. Heineken NV
Performance |
| Timeline |
| BWX Technologies |
| Heineken NV |
BWX Technologies and Heineken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BWX Technologies and Heineken
The main advantage of trading using opposite BWX Technologies and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BWX Technologies 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.| BWX Technologies vs. Hexcel | BWX Technologies vs. Ducommun Incorporated | BWX Technologies vs. Mercury Systems | BWX Technologies vs. Woodward |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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