Correlation Between Anglo American and MOLSON RS

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

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

Diversification Opportunities for Anglo American and MOLSON RS

0.0

Correlation Coefficient

Anglo American  MOLSON RS

Pay attention - limited upside

The 3 months correlation between Anglo and MOLSON is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American plc 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 Anglo American 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 Anglo American plc are associated (or correlated) with MOLSON RS. 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 Anglo American i.e., Anglo American and MOLSON RS go up and down completely randomly.

Pair Corralation between Anglo American and MOLSON RS

Assuming the 90 days trading horizon Anglo American plc is expected to generate 1.34 times more return on investment than MOLSON RS. However, Anglo American is 1.34 times more volatile than MOLSON RS BEVERAGE. It trades about 0.02 of its potential returns per unit of risk. MOLSON RS BEVERAGE is currently generating about 0.02 per unit of risk. If you would invest  2,980  in Anglo American plc on October 26, 2024 and sell it today you would earn a total of  22.00  from holding Anglo American plc or generate 0.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Anglo American plc  vs.  MOLSON RS BEVERAGE

Anglo American plc

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Anglo American plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Anglo American is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

MOLSON RS BEVERAGE

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MOLSON RS BEVERAGE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MOLSON RS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Anglo American and MOLSON RS

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

The idea behind Anglo American plc 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.