Correlation Between Varta AG and Heineken Holding
Can any of the company-specific risk be diversified away by investing in both Varta AG 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 Varta AG and Heineken Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Varta AG and Heineken Holding NV, you can compare the effects of market volatilities on Varta AG 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 Varta AG with a short position of Heineken Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varta AG and Heineken Holding.
Diversification Opportunities for Varta AG and Heineken Holding
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Varta and Heineken is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Varta AG and Heineken Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Holding and Varta AG 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 Varta AG 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 Varta AG i.e., Varta AG and Heineken Holding go up and down completely randomly.
Pair Corralation between Varta AG and Heineken Holding
Assuming the 90 days trading horizon Varta AG is expected to generate 16.97 times more return on investment than Heineken Holding. However, Varta AG is 16.97 times more volatile than Heineken Holding NV. It trades about 0.12 of its potential returns per unit of risk. Heineken Holding NV is currently generating about -0.24 per unit of risk. If you would invest 151.00 in Varta AG on August 28, 2024 and sell it today you would earn a total of 62.00 from holding Varta AG or generate 41.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Varta AG vs. Heineken Holding NV
Performance |
| Timeline |
| Varta AG |
| Heineken Holding |
Varta AG and Heineken Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Varta AG and Heineken Holding
The main advantage of trading using opposite Varta AG and Heineken Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varta AG 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.| Varta AG vs. CHINA EDUCATION GROUP | Varta AG vs. IDP EDUCATION LTD | Varta AG vs. TAL Education Group | Varta AG vs. DEVRY EDUCATION GRP |
| Heineken Holding vs. ITALIAN WINE BRANDS | Heineken Holding vs. VIRGIN WINES UK | Heineken Holding vs. Insurance Australia Group | Heineken Holding vs. Singapore Reinsurance |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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