Correlation Between Molson Coors and Metalrgica Riosulense

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

Diversification Opportunities for Molson Coors and Metalrgica Riosulense

0.95

Correlation Coefficient

Molson Coors  Metalrgica Riosulense

Almost no diversification

The 3 months correlation between Molson and Metalrgica is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and Metalrgica Riosulense SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalrgica Riosulense 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 Metalrgica Riosulense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalrgica Riosulense has no effect on the direction of Molson Coors i.e., Molson Coors and Metalrgica Riosulense go up and down completely randomly.

Pair Corralation between Molson Coors and Metalrgica Riosulense

Assuming the 90 days trading horizon Molson Coors is expected to generate 1.94 times less return on investment than Metalrgica Riosulense. In addition to that, Molson Coors is 1.03 times more volatile than Metalrgica Riosulense SA. It trades about 0.19 of its total potential returns per unit of risk. Metalrgica Riosulense SA is currently generating about 0.38 per unit of volatility. If you would invest  5,500  in Metalrgica Riosulense SA on December 25, 2024 and sell it today you would earn a total of  1,574  from holding Metalrgica Riosulense SA or generate 28.62% return on investment over 90 days.

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

Molson Coors Beverage  vs.  Metalrgica Riosulense SA

Molson Coors Beverage

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Molson Coors sustained solid returns over the last few months and may actually be approaching a breakup point.

Metalrgica Riosulense

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Metalrgica Riosulense SA are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Metalrgica Riosulense unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Molson Coors and Metalrgica Riosulense

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

The idea behind Molson Coors Beverage and Metalrgica Riosulense SA 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 Anywhere module to track or share privately all of your investments from the convenience of any device.