Correlation Between Heineken Bhd and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Heineken Bhd and Dow Jones 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 Bhd and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heineken Bhd and Dow Jones Industrial, you can compare the effects of market volatilities on Heineken Bhd and Dow Jones 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 Bhd with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heineken Bhd and Dow Jones.
Diversification Opportunities for Heineken Bhd and Dow Jones
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Heineken and Dow is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Heineken Bhd and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Heineken Bhd 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 Bhd are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Heineken Bhd i.e., Heineken Bhd and Dow Jones go up and down completely randomly.
Pair Corralation between Heineken Bhd and Dow Jones
Assuming the 90 days trading horizon Heineken Bhd is expected to generate 1.66 times more return on investment than Dow Jones. However, Heineken Bhd is 1.66 times more volatile than Dow Jones Industrial. It trades about 0.12 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.03 per unit of risk. If you would invest 2,196 in Heineken Bhd on September 24, 2024 and sell it today you would earn a total of 214.00 from holding Heineken Bhd or generate 9.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Heineken Bhd vs. Dow Jones Industrial
Performance |
Timeline |
Heineken Bhd and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Heineken Bhd
Pair trading matchups for Heineken Bhd
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Heineken Bhd and Dow Jones
The main advantage of trading using opposite Heineken Bhd and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heineken Bhd position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.Heineken Bhd vs. Carlsberg Brewery Malaysia | Heineken Bhd vs. Genetec Technology Bhd | Heineken Bhd vs. Sunway Construction Group | Heineken Bhd vs. Dagang Nexchange Bhd |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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