Correlation Between Merit Medical and MOLSON COORS

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

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

Diversification Opportunities for Merit Medical and MOLSON COORS

-0.54

Correlation Coefficient

Merit Medical  MOLSON COORS

Excellent diversification

The 3 months correlation between Merit and MOLSON is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems 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 Merit Medical 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 Merit Medical Systems 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 Merit Medical i.e., Merit Medical and MOLSON COORS go up and down completely randomly.

Pair Corralation between Merit Medical and MOLSON COORS

Assuming the 90 days trading horizon Merit Medical is expected to generate 119.74 times less return on investment than MOLSON COORS. But when comparing it to its historical volatility, Merit Medical Systems is 2.04 times less risky than MOLSON COORS. It trades about 0.0 of its potential returns per unit of risk. MOLSON RS BEVERAGE is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,613  in MOLSON RS BEVERAGE on December 20, 2024 and sell it today you would earn a total of  987.00  from holding MOLSON RS BEVERAGE or generate 17.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Merit Medical Systems  vs.  MOLSON RS BEVERAGE

Merit Medical Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Merit Medical Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Merit Medical 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

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 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Merit Medical and MOLSON COORS

The main advantage of trading using opposite Merit Medical and MOLSON COORS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical 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 Merit Medical Systems 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.