Correlation Between Heineken and Reckitt Benckiser
Can any of the company-specific risk be diversified away by investing in both Heineken and Reckitt Benckiser 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 Reckitt Benckiser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heineken NV and Reckitt Benckiser Group, you can compare the effects of market volatilities on Heineken and Reckitt Benckiser 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 Reckitt Benckiser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heineken and Reckitt Benckiser.
Diversification Opportunities for Heineken and Reckitt Benckiser
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Heineken and Reckitt is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Heineken NV and Reckitt Benckiser Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reckitt Benckiser 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 Reckitt Benckiser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reckitt Benckiser has no effect on the direction of Heineken i.e., Heineken and Reckitt Benckiser go up and down completely randomly.
Pair Corralation between Heineken and Reckitt Benckiser
Assuming the 90 days horizon Heineken NV is expected to under-perform the Reckitt Benckiser. In addition to that, Heineken is 1.16 times more volatile than Reckitt Benckiser Group. It trades about -0.35 of its total potential returns per unit of risk. Reckitt Benckiser Group is currently generating about -0.15 per unit of volatility. If you would invest 1,287 in Reckitt Benckiser Group on September 2, 2024 and sell it today you would lose (45.00) from holding Reckitt Benckiser Group or give up 3.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heineken NV vs. Reckitt Benckiser Group
Performance |
| Timeline |
| Heineken NV |
| Reckitt Benckiser |
Heineken and Reckitt Benckiser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heineken and Reckitt Benckiser
The main advantage of trading using opposite Heineken and Reckitt Benckiser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heineken position performs unexpectedly, Reckitt Benckiser 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 Reckitt Benckiser will offset losses from the drop in Reckitt Benckiser's long position.| Heineken vs. Anheuser Busch InBev SANV | Heineken vs. Tsingtao Brewery Co | Heineken vs. Carlsberg AS | Heineken vs. Heineken Holding NV |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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