Correlation Between Molson Coors and European Metals

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

Diversification Opportunities for Molson Coors and European Metals

-0.57

Correlation Coefficient

Molson Coors  European Metals

Excellent diversification

The 3 months correlation between Molson and European is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings 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 European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Molson Coors i.e., Molson Coors and European Metals go up and down completely randomly.

Pair Corralation between Molson Coors and European Metals

Assuming the 90 days trading horizon Molson Coors Beverage is expected to generate 0.34 times more return on investment than European Metals. However, Molson Coors Beverage is 2.94 times less risky than European Metals. It trades about -0.25 of its potential returns per unit of risk. European Metals Holdings is currently generating about -0.14 per unit of risk. If you would invest  6,101  in Molson Coors Beverage on September 28, 2024 and sell it today you would lose (267.00) from holding Molson Coors Beverage or give up 4.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Molson Coors Beverage  vs.  European Metals Holdings

Molson Coors Beverage

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Molson Coors is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

European Metals Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Metals Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Molson Coors and European Metals

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

The idea behind Molson Coors Beverage and European Metals Holdings 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.