Correlation Between Molson Coors and CVR Energy

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

By analyzing existing cross correlation between Molson Coors Beverage and CVR Energy, you can compare the effects of market volatilities on Molson Coors and CVR Energy 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 CVR Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and CVR Energy.

Diversification Opportunities for Molson Coors and CVR Energy

-0.39

Correlation Coefficient

Molson Coors  CVR Energy

Very good diversification

The 3 months correlation between Molson and CVR is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and CVR Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Energy 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 Beverage are associated (or correlated) with CVR Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Energy has no effect on the direction of Molson Coors i.e., Molson Coors and CVR Energy go up and down completely randomly.

Pair Corralation between Molson Coors and CVR Energy

Assuming the 90 days trading horizon Molson Coors Beverage is expected to generate 0.33 times more return on investment than CVR Energy. However, Molson Coors Beverage is 3.0 times less risky than CVR Energy. It trades about 0.01 of its potential returns per unit of risk. CVR Energy is currently generating about -0.03 per unit of risk. If you would invest  5,512  in Molson Coors Beverage on October 22, 2024 and sell it today you would lose (11.00) from holding Molson Coors Beverage or give up 0.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Molson Coors Beverage  vs.  CVR Energy

Molson Coors Beverage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Molson Coors Beverage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Molson Coors is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CVR Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVR Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Molson Coors and CVR Energy

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

The idea behind Molson Coors Beverage and CVR Energy 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.