Correlation Between Heineken Holding and Tradeweb Markets

Can any of the company-specific risk be diversified away by investing in both Heineken Holding and Tradeweb Markets 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 Holding and Tradeweb Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heineken Holding NV and Tradeweb Markets, you can compare the effects of market volatilities on Heineken Holding and Tradeweb Markets 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 Holding with a short position of Tradeweb Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heineken Holding and Tradeweb Markets.

Diversification Opportunities for Heineken Holding and Tradeweb Markets

-0.14

Correlation Coefficient

Heineken Holding  Tradeweb Markets

Good diversification

The 3 months correlation between Heineken and Tradeweb is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Heineken Holding NV and Tradeweb Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradeweb Markets and Heineken Holding 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 Holding NV are associated (or correlated) with Tradeweb Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradeweb Markets has no effect on the direction of Heineken Holding i.e., Heineken Holding and Tradeweb Markets go up and down completely randomly.

Pair Corralation between Heineken Holding and Tradeweb Markets

Assuming the 90 days horizon Heineken Holding NV is expected to generate 1.56 times more return on investment than Tradeweb Markets. However, Heineken Holding is 1.56 times more volatile than Tradeweb Markets. It trades about 0.33 of its potential returns per unit of risk. Tradeweb Markets is currently generating about 0.23 per unit of risk. If you would invest  5,700  in Heineken Holding NV on December 4, 2024 and sell it today you would earn a total of  1,215  from holding Heineken Holding NV or generate 21.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Heineken Holding NV  vs.  Tradeweb Markets

Heineken Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heineken Holding NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Heineken Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Tradeweb Markets

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tradeweb Markets are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tradeweb Markets is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Heineken Holding and Tradeweb Markets

The main advantage of trading using opposite Heineken Holding and Tradeweb Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heineken Holding position performs unexpectedly, Tradeweb Markets 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 Tradeweb Markets will offset losses from the drop in Tradeweb Markets' long position.

The idea behind Heineken Holding NV and Tradeweb Markets 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.