Correlation Between Plastic Omnium and Heineken
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium 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 Plastic Omnium and Heineken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and Heineken NV, you can compare the effects of market volatilities on Plastic Omnium 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 Plastic Omnium with a short position of Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and Heineken.
Diversification Opportunities for Plastic Omnium and Heineken
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Plastic and Heineken is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium i.e., Plastic Omnium and Heineken go up and down completely randomly.
Pair Corralation between Plastic Omnium and Heineken
Assuming the 90 days trading horizon Plastic Omnium is expected to under-perform the Heineken. In addition to that, Plastic Omnium is 2.12 times more volatile than Heineken NV. It trades about -0.27 of its total potential returns per unit of risk. Heineken NV is currently generating about -0.56 per unit of volatility. If you would invest 8,002 in Heineken NV on August 25, 2024 and sell it today you would lose (1,050) from holding Heineken NV or give up 13.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plastic Omnium vs. Heineken NV
Performance |
| Timeline |
| Plastic Omnium |
| Heineken NV |
Plastic Omnium and Heineken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and Heineken
The main advantage of trading using opposite Plastic Omnium and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium 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.| Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc |
| Heineken vs. Plastic Omnium | Heineken vs. Diamondrock Hospitality Co | Heineken vs. HEALTHCARE REAL A | Heineken vs. Cardinal Health |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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