Correlation Between Molson Coors and APA

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

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

Diversification Opportunities for Molson Coors and APA

-0.35

Correlation Coefficient

Molson Coors  APA

Very good diversification

The 3 months correlation between Molson and APA is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation and Molson Coors 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 Molson Coors Beverage are associated (or correlated) with APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Corporation has no effect on the direction of Molson Coors i.e., Molson Coors and APA go up and down completely randomly.

Pair Corralation between Molson Coors and APA

Assuming the 90 days trading horizon Molson Coors Beverage is expected to generate 0.43 times more return on investment than APA. However, Molson Coors Beverage is 2.33 times less risky than APA. It trades about 0.02 of its potential returns per unit of risk. APA Corporation is currently generating about -0.02 per unit of risk. If you would invest  27,722  in Molson Coors Beverage on October 4, 2024 and sell it today you would earn a total of  2,178  from holding Molson Coors Beverage or generate 7.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.51%
Values	Daily Returns

Molson Coors Beverage  vs.  APA Corp.

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.

APA Corporation

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in APA Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, APA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Molson Coors and APA

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

The idea behind Molson Coors Beverage and APA Corporation 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.