Correlation Between Molson Coors and CAP LEASE

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

Diversification Opportunities for Molson Coors and CAP LEASE

0.12

Correlation Coefficient

Molson Coors  CAP LEASE

Average diversification

The 3 months correlation between Molson and CAP is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and CAP LEASE AVIATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAP LEASE AVIATION 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 CAP LEASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAP LEASE AVIATION has no effect on the direction of Molson Coors i.e., Molson Coors and CAP LEASE go up and down completely randomly.

Pair Corralation between Molson Coors and CAP LEASE

Assuming the 90 days trading horizon Molson Coors Beverage is expected to generate 0.37 times more return on investment than CAP LEASE. However, Molson Coors Beverage is 2.67 times less risky than CAP LEASE. It trades about 0.26 of its potential returns per unit of risk. CAP LEASE AVIATION is currently generating about 0.07 per unit of risk. If you would invest  5,504  in Molson Coors Beverage on December 1, 2024 and sell it today you would earn a total of  688.00  from holding Molson Coors Beverage or generate 12.5% return on investment over 90 days.

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

Molson Coors Beverage  vs.  CAP LEASE AVIATION

Molson Coors Beverage

Risk-Adjusted Performance

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.

CAP LEASE AVIATION

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CAP LEASE AVIATION are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, CAP LEASE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Molson Coors and CAP LEASE

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

The idea behind Molson Coors Beverage and CAP LEASE AVIATION 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.