Correlation Between Microsoft and Heineken Holding
Can any of the company-specific risk be diversified away by investing in both Microsoft and Heineken Holding 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 Microsoft and Heineken Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Heineken Holding NV, you can compare the effects of market volatilities on Microsoft and Heineken Holding 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 Microsoft with a short position of Heineken Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Heineken Holding.
Diversification Opportunities for Microsoft and Heineken Holding
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Heineken is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Heineken Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Holding and Microsoft 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 Microsoft are associated (or correlated) with Heineken Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken Holding has no effect on the direction of Microsoft i.e., Microsoft and Heineken Holding go up and down completely randomly.
Pair Corralation between Microsoft and Heineken Holding
Given the investment horizon of 90 days Microsoft is expected to generate 0.46 times more return on investment than Heineken Holding. However, Microsoft is 2.16 times less risky than Heineken Holding. It trades about -0.08 of its potential returns per unit of risk. Heineken Holding NV is currently generating about -0.11 per unit of risk. If you would invest 43,703 in Microsoft on October 20, 2024 and sell it today you would lose (800.00) from holding Microsoft or give up 1.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Heineken Holding NV
Performance |
| Timeline |
| Microsoft |
| Heineken Holding |
Microsoft and Heineken Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Heineken Holding
The main advantage of trading using opposite Microsoft and Heineken Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Heineken Holding 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 Holding will offset losses from the drop in Heineken Holding's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Heineken Holding vs. Heineken NV | Heineken Holding vs. Anheuser Busch InBev SANV | Heineken Holding vs. Tsingtao Brewery Co | Heineken Holding vs. Carlsberg AS |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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