Correlation Between Heineken and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both Heineken and BNP Paribas 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 BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heineken NV and BNP Paribas SA, you can compare the effects of market volatilities on Heineken and BNP Paribas 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 BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heineken and BNP Paribas.
Diversification Opportunities for Heineken and BNP Paribas
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Heineken and BNP is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Heineken NV and BNP Paribas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas SA 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 NV are associated (or correlated) with BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas SA has no effect on the direction of Heineken i.e., Heineken and BNP Paribas go up and down completely randomly.
Pair Corralation between Heineken and BNP Paribas
Assuming the 90 days horizon Heineken NV is expected to generate 0.81 times more return on investment than BNP Paribas. However, Heineken NV is 1.23 times less risky than BNP Paribas. It trades about -0.35 of its potential returns per unit of risk. BNP Paribas SA is currently generating about -0.4 per unit of risk. If you would invest 4,075 in Heineken NV on September 2, 2024 and sell it today you would lose (363.00) from holding Heineken NV or give up 8.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heineken NV vs. BNP Paribas SA
Performance |
| Timeline |
| Heineken NV |
| BNP Paribas SA |
Heineken and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heineken and BNP Paribas
The main advantage of trading using opposite Heineken and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heineken position performs unexpectedly, BNP Paribas 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 BNP Paribas will offset losses from the drop in BNP Paribas' long position.| Heineken vs. Anheuser Busch InBev SANV | Heineken vs. Tsingtao Brewery Co | Heineken vs. Carlsberg AS | Heineken vs. Heineken Holding NV |
| BNP Paribas vs. Societe Generale ADR | BNP Paribas vs. Intesa Sanpaolo SpA | BNP Paribas vs. Commerzbank AG PK | BNP Paribas vs. Swedbank AB |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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