Correlation Between Molson Coors and Heineken

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

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

Diversification Opportunities for Molson Coors and Heineken

0.86

Correlation Coefficient

Molson Coors  Heineken

Very poor diversification

The 3 months correlation between Molson and Heineken is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Brewing and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and Molson Coors 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 Molson Coors Brewing 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 Molson Coors i.e., Molson Coors and Heineken go up and down completely randomly.

Pair Corralation between Molson Coors and Heineken

Considering the 90-day investment horizon Molson Coors is expected to generate 1.92 times less return on investment than Heineken. But when comparing it to its historical volatility, Molson Coors Brewing is 1.12 times less risky than Heineken. It trades about 0.06 of its potential returns per unit of risk. Heineken NV is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,547  in Heineken NV on December 30, 2024 and sell it today you would earn a total of  548.00  from holding Heineken NV or generate 15.45% return on investment over 90 days.

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

Molson Coors Brewing  vs.  Heineken NV

Molson Coors Brewing

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Brewing are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Heineken NV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heineken NV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Heineken showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Molson Coors and Heineken

The main advantage of trading using opposite Molson Coors and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors 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 Molson Coors Brewing 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.