Correlation Between BlackRock and Molson Coors

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

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

Diversification Opportunities for BlackRock and Molson Coors

0.71

Correlation Coefficient

BlackRock  Molson Coors

Poor diversification

The 3 months correlation between BlackRock and Molson is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock 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 BlackRock 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 BlackRock 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 BlackRock i.e., BlackRock and Molson Coors go up and down completely randomly.

Pair Corralation between BlackRock and Molson Coors

Assuming the 90 days trading horizon BlackRock is expected to generate 1.37 times more return on investment than Molson Coors. However, BlackRock is 1.37 times more volatile than Molson Coors Beverage. It trades about 0.13 of its potential returns per unit of risk. Molson Coors Beverage is currently generating about 0.0 per unit of risk. If you would invest  5,129  in BlackRock on October 4, 2024 and sell it today you would earn a total of  4,503  from holding BlackRock or generate 87.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.19%
Values	Daily Returns

BlackRock  vs.  Molson Coors Beverage

BlackRock

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BlackRock sustained solid returns over the last few months and may actually be approaching a breakup point.

Molson Coors Beverage

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Molson Coors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BlackRock and Molson Coors

The main advantage of trading using opposite BlackRock and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock 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 BlackRock 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.