Correlation Between Boston Beer and Molson Coors

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

By analyzing existing cross correlation between The Boston Beer and Molson Coors Beverage, you can compare the effects of market volatilities on Boston Beer and Molson Coors 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 Boston Beer with a short position of Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Molson Coors.

Diversification Opportunities for Boston Beer and Molson Coors

0.92

Correlation Coefficient

Boston Beer  Molson Coors

Almost no diversification

The 3 months correlation between Boston and Molson is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and Molson Coors Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Beverage and Boston Beer 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 The Boston Beer are associated (or correlated) with Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Beverage has no effect on the direction of Boston Beer i.e., Boston Beer and Molson Coors go up and down completely randomly.

Pair Corralation between Boston Beer and Molson Coors

Assuming the 90 days trading horizon The Boston Beer is expected to generate 0.98 times more return on investment than Molson Coors. However, The Boston Beer is 1.02 times less risky than Molson Coors. It trades about 0.1 of its potential returns per unit of risk. Molson Coors Beverage is currently generating about 0.08 per unit of risk. If you would invest  25,180  in The Boston Beer on October 10, 2024 and sell it today you would earn a total of  2,520  from holding The Boston Beer or generate 10.01% return on investment over 90 days.

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

The Boston Beer  vs.  Molson Coors Beverage

Boston Beer

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Boston Beer are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Boston Beer may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Molson Coors Beverage

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Boston Beer and Molson Coors

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

The idea behind The Boston Beer and Molson Coors Beverage 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.