Correlation Between Molson Coors and Citigroup

Can any of the company-specific risk be diversified away by investing in both Molson Coors and Citigroup 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 Citigroup 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 Citigroup, you can compare the effects of market volatilities on Molson Coors and Citigroup 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 Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and Citigroup.

Diversification Opportunities for Molson Coors and Citigroup

0.77

Correlation Coefficient

Molson Coors  Citigroup

Poor diversification

The 3 months correlation between Molson and Citigroup is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup 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 Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Molson Coors i.e., Molson Coors and Citigroup go up and down completely randomly.

Pair Corralation between Molson Coors and Citigroup

Assuming the 90 days trading horizon Molson Coors is expected to generate 53.66 times less return on investment than Citigroup. But when comparing it to its historical volatility, Molson Coors Beverage is 23.35 times less risky than Citigroup. It trades about 0.13 of its potential returns per unit of risk. Citigroup is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  5,876  in Citigroup on October 25, 2024 and sell it today you would earn a total of  2,162  from holding Citigroup or generate 36.79% return on investment over 90 days.

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

Molson Coors Beverage  vs.  Citigroup

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.

Citigroup

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Citigroup sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Molson Coors and Citigroup

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

The idea behind Molson Coors Beverage and Citigroup 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.