Correlation Between Morgan Stanley and Heineken

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

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

Diversification Opportunities for Morgan Stanley and Heineken

-0.88

Correlation Coefficient

Morgan Stanley  Heineken

Pay attention - limited upside

The 3 months correlation between Morgan and Heineken is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and Morgan Stanley 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 Morgan Stanley Direct 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 Morgan Stanley i.e., Morgan Stanley and Heineken go up and down completely randomly.

Pair Corralation between Morgan Stanley and Heineken

Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 0.83 times more return on investment than Heineken. However, Morgan Stanley Direct is 1.2 times less risky than Heineken. It trades about 0.09 of its potential returns per unit of risk. Heineken NV is currently generating about -0.19 per unit of risk. If you would invest  1,945  in Morgan Stanley Direct on October 15, 2024 and sell it today you would earn a total of  107.00  from holding Morgan Stanley Direct or generate 5.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Morgan Stanley Direct  vs.  Heineken NV

Morgan Stanley Direct

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

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 Morgan Stanley and Heineken

The main advantage of trading using opposite Morgan Stanley and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley 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 Morgan Stanley Direct 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .