Correlation Between CDN IMPERIAL and Molson Coors

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

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

Diversification Opportunities for CDN IMPERIAL and Molson Coors

-0.19

Correlation Coefficient

CDN IMPERIAL  Molson Coors

Good diversification

The 3 months correlation between CDN and Molson is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK 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 CDN IMPERIAL 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 CDN IMPERIAL BANK 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 CDN IMPERIAL i.e., CDN IMPERIAL and Molson Coors go up and down completely randomly.

Pair Corralation between CDN IMPERIAL and Molson Coors

Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to under-perform the Molson Coors. But the stock apears to be less risky and, when comparing its historical volatility, CDN IMPERIAL BANK is 1.42 times less risky than Molson Coors. The stock trades about -0.15 of its potential returns per unit of risk. The Molson Coors Beverage is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  5,630  in Molson Coors Beverage on December 21, 2024 and sell it today you would lose (422.00) from holding Molson Coors Beverage or give up 7.5% of portfolio value over 90 days.

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

CDN IMPERIAL BANK  vs.  Molson Coors Beverage

CDN IMPERIAL BANK

Risk-Adjusted Performance

Very Weak

Over the last 90 days CDN IMPERIAL BANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Molson Coors Beverage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Molson Coors Beverage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with CDN IMPERIAL and Molson Coors

The main advantage of trading using opposite CDN IMPERIAL and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL 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 CDN IMPERIAL BANK 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.