Correlation Between Morgan Stanley and Kraft Heinz

Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Kraft Heinz 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 Kraft Heinz 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 The Kraft Heinz, you can compare the effects of market volatilities on Morgan Stanley and Kraft Heinz 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 Kraft Heinz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Kraft Heinz.

Diversification Opportunities for Morgan Stanley and Kraft Heinz

-0.36

Correlation Coefficient

Morgan Stanley  Kraft Heinz

Very good diversification

The 3 months correlation between Morgan and Kraft is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and The Kraft Heinz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Heinz 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 Kraft Heinz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Heinz has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Kraft Heinz go up and down completely randomly.

Pair Corralation between Morgan Stanley and Kraft Heinz

Given the investment horizon of 90 days Morgan Stanley is expected to generate 1.12 times less return on investment than Kraft Heinz. But when comparing it to its historical volatility, Morgan Stanley Direct is 1.41 times less risky than Kraft Heinz. It trades about 0.09 of its potential returns per unit of risk. The Kraft Heinz is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,620  in The Kraft Heinz on September 27, 2024 and sell it today you would earn a total of  100.00  from holding The Kraft Heinz or generate 2.16% return on investment over 90 days.

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

Morgan Stanley Direct  vs.  The Kraft Heinz

Morgan Stanley Direct

Risk-Adjusted Performance

11 of 100

OK

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

Kraft Heinz

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Kraft Heinz has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Kraft Heinz is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Morgan Stanley and Kraft Heinz

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

The idea behind Morgan Stanley Direct and The Kraft Heinz 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..