Correlation Between Fevertree Drinks and HEINEKEN
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks 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 Fevertree Drinks and HEINEKEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks PLC and HEINEKEN SP ADR, you can compare the effects of market volatilities on Fevertree Drinks 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 Fevertree Drinks with a short position of HEINEKEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and HEINEKEN.
Diversification Opportunities for Fevertree Drinks and HEINEKEN
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fevertree and HEINEKEN is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks PLC and HEINEKEN SP ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEINEKEN SP ADR and Fevertree Drinks 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 Fevertree Drinks PLC 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 SP ADR has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and HEINEKEN go up and down completely randomly.
Pair Corralation between Fevertree Drinks and HEINEKEN
Assuming the 90 days trading horizon Fevertree Drinks PLC is expected to generate 1.78 times more return on investment than HEINEKEN. However, Fevertree Drinks is 1.78 times more volatile than HEINEKEN SP ADR. It trades about -0.1 of its potential returns per unit of risk. HEINEKEN SP ADR is currently generating about -0.18 per unit of risk. If you would invest 929.00 in Fevertree Drinks PLC on October 24, 2024 and sell it today you would lose (149.00) from holding Fevertree Drinks PLC or give up 16.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.78% |
| Values | Daily Returns |
Fevertree Drinks PLC vs. HEINEKEN SP ADR
Performance |
| Timeline |
| Fevertree Drinks PLC |
| HEINEKEN SP ADR |
Fevertree Drinks and HEINEKEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and HEINEKEN
The main advantage of trading using opposite Fevertree Drinks and HEINEKEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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.| Fevertree Drinks vs. ARISTOCRAT LEISURE | Fevertree Drinks vs. LG Display Co | Fevertree Drinks vs. Pembina Pipeline Corp | Fevertree Drinks vs. Luckin Coffee |
| HEINEKEN vs. NORTHEAST UTILITIES | HEINEKEN vs. Mobilezone Holding AG | HEINEKEN vs. alstria office REIT AG | HEINEKEN vs. Fevertree Drinks PLC |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |