Correlation Between Molina Healthcare and MOLSON COORS

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

By analyzing existing cross correlation between Molina Healthcare and MOLSON RS BEVERAGE, you can compare the effects of market volatilities on Molina Healthcare 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 Molina Healthcare with a short position of MOLSON COORS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molina Healthcare and MOLSON COORS.

Diversification Opportunities for Molina Healthcare and MOLSON COORS

-0.46

Correlation Coefficient

Molina Healthcare  MOLSON COORS

Very good diversification

The 3 months correlation between Molina and MOLSON is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare and MOLSON RS BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOLSON RS BEVERAGE and Molina Healthcare 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 Molina Healthcare 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 RS BEVERAGE has no effect on the direction of Molina Healthcare i.e., Molina Healthcare and MOLSON COORS go up and down completely randomly.

Pair Corralation between Molina Healthcare and MOLSON COORS

Assuming the 90 days trading horizon Molina Healthcare is expected to under-perform the MOLSON COORS. In addition to that, Molina Healthcare is 1.43 times more volatile than MOLSON RS BEVERAGE. It trades about -0.11 of its total potential returns per unit of risk. MOLSON RS BEVERAGE is currently generating about 0.04 per unit of volatility. If you would invest  5,308  in MOLSON RS BEVERAGE on October 7, 2024 and sell it today you would earn a total of  92.00  from holding MOLSON RS BEVERAGE or generate 1.73% return on investment over 90 days.

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

Molina Healthcare  vs.  MOLSON RS BEVERAGE

Molina Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Molina Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Molina Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

MOLSON RS BEVERAGE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MOLSON RS BEVERAGE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MOLSON COORS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Molina Healthcare and MOLSON COORS

The main advantage of trading using opposite Molina Healthcare and MOLSON COORS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molina Healthcare 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's long position.

The idea behind Molina Healthcare and MOLSON RS 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.