Correlation Between Heineken and Heineken Holding
Can any of the company-specific risk be diversified away by investing in both Heineken 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 Heineken and Heineken Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heineken and Heineken Holding NV, you can compare the effects of market volatilities on Heineken 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 Heineken with a short position of Heineken Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heineken and Heineken Holding.
Diversification Opportunities for Heineken and Heineken Holding
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Heineken and Heineken is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Heineken and Heineken Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Holding and Heineken 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 Heineken 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 Heineken i.e., Heineken and Heineken Holding go up and down completely randomly.
Pair Corralation between Heineken and Heineken Holding
Assuming the 90 days trading horizon Heineken is expected to generate 0.56 times more return on investment than Heineken Holding. However, Heineken is 1.8 times less risky than Heineken Holding. It trades about -0.16 of its potential returns per unit of risk. Heineken Holding NV is currently generating about -0.1 per unit of risk. If you would invest 8,144 in Heineken on November 2, 2024 and sell it today you would lose (1,392) from holding Heineken or give up 17.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.17% |
| Values | Daily Returns |
Heineken vs. Heineken Holding NV
Performance |
| Timeline |
| Heineken |
| Heineken Holding |
Heineken and Heineken Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heineken and Heineken Holding
The main advantage of trading using opposite Heineken and Heineken Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heineken 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.| Heineken vs. Unilever PLC | Heineken vs. Koninklijke Philips NV | Heineken vs. Akzo Nobel NV | Heineken vs. Koninklijke Ahold Delhaize |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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