Correlation Between National Retail and Molson Coors

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

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

Diversification Opportunities for National Retail and Molson Coors

-0.56

Correlation Coefficient

National Retail  Molson Coors

Excellent diversification

The 3 months correlation between National and Molson is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties 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 National Retail 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 National Retail Properties 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 National Retail i.e., National Retail and Molson Coors go up and down completely randomly.

Pair Corralation between National Retail and Molson Coors

Assuming the 90 days trading horizon National Retail Properties is expected to under-perform the Molson Coors. But the stock apears to be less risky and, when comparing its historical volatility, National Retail Properties is 1.11 times less risky than Molson Coors. The stock trades about -0.07 of its potential returns per unit of risk. The Molson Coors Beverage is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4,873  in Molson Coors Beverage on September 26, 2024 and sell it today you would earn a total of  799.00  from holding Molson Coors Beverage or generate 16.4% return on investment over 90 days.

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

National Retail Properties  vs.  Molson Coors Beverage

National Retail Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Retail Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

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 National Retail and Molson Coors

The main advantage of trading using opposite National Retail and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail 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 National Retail Properties 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.