Correlation Between VERISK ANLYTCS and Heineken

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

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

Diversification Opportunities for VERISK ANLYTCS and Heineken

-0.93

Correlation Coefficient

VERISK ANLYTCS  Heineken

Pay attention - limited upside

The 3 months correlation between VERISK and Heineken is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding VERISK ANLYTCS A and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and VERISK ANLYTCS 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 VERISK ANLYTCS A 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 VERISK ANLYTCS i.e., VERISK ANLYTCS and Heineken go up and down completely randomly.

Pair Corralation between VERISK ANLYTCS and Heineken

Assuming the 90 days trading horizon VERISK ANLYTCS A is expected to under-perform the Heineken. But the stock apears to be less risky and, when comparing its historical volatility, VERISK ANLYTCS A is 3.34 times less risky than Heineken. The stock trades about -0.45 of its potential returns per unit of risk. The Heineken NV is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  6,914  in Heineken NV on October 7, 2024 and sell it today you would lose (54.00) from holding Heineken NV or give up 0.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

VERISK ANLYTCS A  vs.  Heineken NV

VERISK ANLYTCS A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VERISK ANLYTCS A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, VERISK ANLYTCS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Heineken NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heineken NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with VERISK ANLYTCS and Heineken

The main advantage of trading using opposite VERISK ANLYTCS and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VERISK ANLYTCS 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.

The idea behind VERISK ANLYTCS A and Heineken NV 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.