Correlation Between Heineken Holding and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both Heineken Holding and Unilever PLC 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 Holding and Unilever PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heineken Holding NV and Unilever PLC, you can compare the effects of market volatilities on Heineken Holding and Unilever PLC 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 Holding with a short position of Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heineken Holding and Unilever PLC.
Diversification Opportunities for Heineken Holding and Unilever PLC
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Heineken and Unilever is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Heineken Holding NV and Unilever PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC and Heineken Holding 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 Holding NV are associated (or correlated) with Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC has no effect on the direction of Heineken Holding i.e., Heineken Holding and Unilever PLC go up and down completely randomly.
Pair Corralation between Heineken Holding and Unilever PLC
Assuming the 90 days trading horizon Heineken Holding NV is expected to under-perform the Unilever PLC. But the stock apears to be less risky and, when comparing its historical volatility, Heineken Holding NV is 1.2 times less risky than Unilever PLC. The stock trades about -0.28 of its potential returns per unit of risk. The Unilever PLC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,472 in Unilever PLC on September 12, 2024 and sell it today you would earn a total of 108.00 from holding Unilever PLC or generate 1.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heineken Holding NV vs. Unilever PLC
Performance |
| Timeline |
| Heineken Holding |
| Unilever PLC |
Heineken Holding and Unilever PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heineken Holding and Unilever PLC
The main advantage of trading using opposite Heineken Holding and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heineken Holding position performs unexpectedly, Unilever PLC 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 Unilever PLC will offset losses from the drop in Unilever PLC's long position.| Heineken Holding vs. Heineken | Heineken Holding vs. Wolters Kluwer NV | Heineken Holding vs. Akzo Nobel NV | Heineken Holding vs. Aalberts Industries NV |
| Unilever PLC vs. Koninklijke Philips NV | Unilever PLC vs. Koninklijke Ahold Delhaize | Unilever PLC vs. ING Groep NV | Unilever PLC vs. Heineken |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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