Correlation Between Heineken Holding and Molson Coors

Can any of the company-specific risk be diversified away by investing in both Heineken Holding and Molson Coors 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 Molson Coors 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 Molson Coors Beverage, you can compare the effects of market volatilities on Heineken Holding and Molson Coors 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 Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heineken Holding and Molson Coors.

Diversification Opportunities for Heineken Holding and Molson Coors

-0.85

Correlation Coefficient

Heineken Holding  Molson Coors

Pay attention - limited upside

The 3 months correlation between Heineken and Molson is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Heineken Holding NV and Molson Coors Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Beverage 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Beverage has no effect on the direction of Heineken Holding i.e., Heineken Holding and Molson Coors go up and down completely randomly.

Pair Corralation between Heineken Holding and Molson Coors

Assuming the 90 days horizon Heineken Holding NV is expected to under-perform the Molson Coors. In addition to that, Heineken Holding is 1.51 times more volatile than Molson Coors Beverage. It trades about -0.24 of its total potential returns per unit of risk. Molson Coors Beverage is currently generating about 0.15 per unit of volatility. If you would invest  5,718  in Molson Coors Beverage on September 17, 2024 and sell it today you would earn a total of  458.00  from holding Molson Coors Beverage or generate 8.01% return on investment over 90 days.

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

Heineken Holding NV  vs.  Molson Coors Beverage

Heineken Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heineken Holding NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Molson Coors Beverage

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Heineken Holding and Molson Coors

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

The idea behind Heineken Holding NV and Molson Coors Beverage 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.