Correlation Between Molson Coors and Worldwide Healthcare

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

Diversification Opportunities for Molson Coors and Worldwide Healthcare

-0.46

Correlation Coefficient

Molson Coors  Worldwide Healthcare

Very good diversification

The 3 months correlation between Molson and Worldwide is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and Worldwide Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldwide Healthcare 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 Worldwide Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldwide Healthcare has no effect on the direction of Molson Coors i.e., Molson Coors and Worldwide Healthcare go up and down completely randomly.

Pair Corralation between Molson Coors and Worldwide Healthcare

Assuming the 90 days trading horizon Molson Coors Beverage is expected to generate 1.96 times more return on investment than Worldwide Healthcare. However, Molson Coors is 1.96 times more volatile than Worldwide Healthcare Trust. It trades about 0.02 of its potential returns per unit of risk. Worldwide Healthcare Trust is currently generating about -0.05 per unit of risk. If you would invest  5,834  in Molson Coors Beverage on December 25, 2024 and sell it today you would earn a total of  60.00  from holding Molson Coors Beverage or generate 1.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Molson Coors Beverage  vs.  Worldwide Healthcare Trust

Molson Coors Beverage

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 1 (%) 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Worldwide Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Worldwide Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Worldwide Healthcare is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Molson Coors and Worldwide Healthcare

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

The idea behind Molson Coors Beverage and Worldwide Healthcare Trust 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.