Correlation Between Lundin Energy and Heineken
Can any of the company-specific risk be diversified away by investing in both Lundin Energy 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 Lundin Energy and Heineken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Energy AB and Heineken NV, you can compare the effects of market volatilities on Lundin Energy 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 Lundin Energy with a short position of Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Energy and Heineken.
Diversification Opportunities for Lundin Energy and Heineken
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lundin and Heineken is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and Lundin Energy 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 Lundin Energy AB 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 Lundin Energy i.e., Lundin Energy and Heineken go up and down completely randomly.
Pair Corralation between Lundin Energy and Heineken
Assuming the 90 days horizon Lundin Energy AB is expected to under-perform the Heineken. In addition to that, Lundin Energy is 2.07 times more volatile than Heineken NV. It trades about -0.36 of its total potential returns per unit of risk. Heineken NV is currently generating about -0.43 per unit of volatility. If you would invest 8,596 in Heineken NV on August 28, 2024 and sell it today you would lose (1,171) from holding Heineken NV or give up 13.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Energy AB vs. Heineken NV
Performance |
| Timeline |
| Lundin Energy AB |
| Heineken NV |
Lundin Energy and Heineken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Energy and Heineken
The main advantage of trading using opposite Lundin Energy and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Energy 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.| Lundin Energy vs. Renew Energy Global | Lundin Energy vs. Energy Vault Holdings | Lundin Energy vs. Fluence Energy | Lundin Energy vs. Advent Technologies Holdings |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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