Correlation Between Itron and Heineken
Can any of the company-specific risk be diversified away by investing in both Itron 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 Itron and Heineken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itron Inc and Heineken NV, you can compare the effects of market volatilities on Itron 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 Itron with a short position of Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itron and Heineken.
Diversification Opportunities for Itron and Heineken
Pay attention - limited upside
The 3 months correlation between Itron and Heineken is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Itron Inc and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and Itron 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 Itron Inc 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 NV has no effect on the direction of Itron i.e., Itron and Heineken go up and down completely randomly.
Pair Corralation between Itron and Heineken
Given the investment horizon of 90 days Itron Inc is expected to generate 1.44 times more return on investment than Heineken. However, Itron is 1.44 times more volatile than Heineken NV. It trades about 0.27 of its potential returns per unit of risk. Heineken NV is currently generating about -0.43 per unit of risk. If you would invest 10,483 in Itron Inc on August 28, 2024 and sell it today you would earn a total of 1,387 from holding Itron Inc or generate 13.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Itron Inc vs. Heineken NV
Performance |
| Timeline |
| Itron Inc |
| Heineken NV |
Itron and Heineken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itron and Heineken
The main advantage of trading using opposite Itron and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itron 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.The idea behind Itron Inc and Heineken NV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Heineken vs. Barfresh Food Group | Heineken vs. Fbec Worldwide | Heineken vs. Flow Beverage Corp | Heineken vs. Eq Energy Drink |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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