Correlation Between Heineken and HEINEKEN
Can any of the company-specific risk be diversified away by investing in both Heineken and HEINEKEN 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 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heineken NV and HEINEKEN SP ADR, you can compare the effects of market volatilities on Heineken and HEINEKEN 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heineken and HEINEKEN.
Diversification Opportunities for Heineken and HEINEKEN
No risk reduction
The 3 months correlation between Heineken and HEINEKEN is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Heineken NV and HEINEKEN SP ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEINEKEN SP ADR 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 HEINEKEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEINEKEN SP ADR has no effect on the direction of Heineken i.e., Heineken and HEINEKEN go up and down completely randomly.
Pair Corralation between Heineken and HEINEKEN
Assuming the 90 days trading horizon Heineken NV is expected to generate 1.05 times more return on investment than HEINEKEN. However, Heineken is 1.05 times more volatile than HEINEKEN SP ADR. It trades about -0.09 of its potential returns per unit of risk. HEINEKEN SP ADR is currently generating about -0.1 per unit of risk. If you would invest 8,535 in Heineken NV on September 3, 2024 and sell it today you would lose (1,543) from holding Heineken NV or give up 18.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heineken NV vs. HEINEKEN SP ADR
Performance |
| Timeline |
| Heineken NV |
| HEINEKEN SP ADR |
Heineken and HEINEKEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heineken and HEINEKEN
The main advantage of trading using opposite Heineken and HEINEKEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heineken position performs unexpectedly, HEINEKEN 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 will offset losses from the drop in HEINEKEN's long position.| Heineken vs. Heineken Holding NV | Heineken vs. Tsingtao Brewery | Heineken vs. Asahi Group Holdings | Heineken vs. Kirin Holdings |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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