Correlation Between Cass Information and Molson Coors

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

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

Diversification Opportunities for Cass Information and Molson Coors

0.9

Correlation Coefficient

Cass Information  Molson Coors

Almost no diversification

The 3 months correlation between Cass and Molson is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems 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 Cass Information 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 Cass Information Systems 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 Cass Information i.e., Cass Information and Molson Coors go up and down completely randomly.

Pair Corralation between Cass Information and Molson Coors

Assuming the 90 days horizon Cass Information is expected to generate 2.16 times less return on investment than Molson Coors. In addition to that, Cass Information is 1.27 times more volatile than Molson Coors Beverage. It trades about 0.01 of its total potential returns per unit of risk. Molson Coors Beverage is currently generating about 0.04 per unit of volatility. If you would invest  4,478  in Molson Coors Beverage on September 20, 2024 and sell it today you would earn a total of  1,134  from holding Molson Coors Beverage or generate 25.32% return on investment over 90 days.

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

Cass Information Systems  vs.  Molson Coors Beverage

Cass Information Systems

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cass Information Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cass Information may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Molson Coors Beverage

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Molson Coors unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cass Information and Molson Coors

The main advantage of trading using opposite Cass Information and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information 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 Cass Information Systems 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 Global Correlations module to find global opportunities by holding instruments from different markets.