Correlation Between Heineken and Danone PK
Can any of the company-specific risk be diversified away by investing in both Heineken and Danone PK 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 Danone PK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heineken NV and Danone PK, you can compare the effects of market volatilities on Heineken and Danone PK 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 Danone PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heineken and Danone PK.
Diversification Opportunities for Heineken and Danone PK
Very weak diversification
The 3 months correlation between Heineken and Danone is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Heineken NV and Danone PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danone PK 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 Danone PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danone PK has no effect on the direction of Heineken i.e., Heineken and Danone PK go up and down completely randomly.
Pair Corralation between Heineken and Danone PK
If you would invest 1,267 in Danone PK on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Danone PK or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Heineken NV vs. Danone PK
Performance |
| Timeline |
| Heineken NV |
| Danone PK |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Heineken and Danone PK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heineken and Danone PK
The main advantage of trading using opposite Heineken and Danone PK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heineken position performs unexpectedly, Danone PK 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 Danone PK will offset losses from the drop in Danone PK's long position.| Heineken vs. Anheuser Busch InBev SANV | Heineken vs. Tsingtao Brewery Co | Heineken vs. Carlsberg AS | Heineken vs. Heineken Holding NV |
| Danone PK vs. Heineken NV | Danone PK vs. Reckitt Benckiser Group | Danone PK vs. LOreal Co ADR | Danone PK vs. BASF SE ADR |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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