Correlation Between Molson Coors and XLMedia PLC

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

Diversification Opportunities for Molson Coors and XLMedia PLC

0.54

Correlation Coefficient

Molson Coors  XLMedia PLC

Very weak diversification

The 3 months correlation between Molson and XLMedia is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Molson Coors i.e., Molson Coors and XLMedia PLC go up and down completely randomly.

Pair Corralation between Molson Coors and XLMedia PLC

Assuming the 90 days trading horizon Molson Coors is expected to generate 32.4 times less return on investment than XLMedia PLC. But when comparing it to its historical volatility, Molson Coors Beverage is 4.81 times less risky than XLMedia PLC. It trades about 0.01 of its potential returns per unit of risk. XLMedia PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  725.00  in XLMedia PLC on September 24, 2024 and sell it today you would earn a total of  195.00  from holding XLMedia PLC or generate 26.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Molson Coors Beverage  vs.  XLMedia PLC

Molson Coors Beverage

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

XLMedia PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Molson Coors and XLMedia PLC

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

The idea behind Molson Coors Beverage and XLMedia PLC 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.