Correlation Between Molson Coors and Anheuser Busch

Can any of the company-specific risk be diversified away by investing in both Molson Coors and Anheuser Busch 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 Anheuser Busch into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Molson Coors Brewing and Anheuser Busch InBev SANV, you can compare the effects of market volatilities on Molson Coors and Anheuser Busch 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 Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and Anheuser Busch.

Diversification Opportunities for Molson Coors and Anheuser Busch

0.81

Correlation Coefficient

Molson Coors  Anheuser Busch

Very poor diversification

The 3 months correlation between Molson and Anheuser is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Brewing and Anheuser Busch InBev SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch InBev 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 Brewing are associated (or correlated) with Anheuser Busch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anheuser Busch InBev has no effect on the direction of Molson Coors i.e., Molson Coors and Anheuser Busch go up and down completely randomly.

Pair Corralation between Molson Coors and Anheuser Busch

Assuming the 90 days horizon Molson Coors is expected to generate 5.22 times less return on investment than Anheuser Busch. But when comparing it to its historical volatility, Molson Coors Brewing is 1.41 times less risky than Anheuser Busch. It trades about 0.03 of its potential returns per unit of risk. Anheuser Busch InBev SANV is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5,000  in Anheuser Busch InBev SANV on December 1, 2024 and sell it today you would earn a total of  650.00  from holding Anheuser Busch InBev SANV or generate 13.0% return on investment over 90 days.

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

Molson Coors Brewing  vs.  Anheuser Busch InBev SANV

Molson Coors Brewing

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Brewing are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Molson Coors is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Anheuser Busch InBev

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anheuser Busch InBev SANV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Anheuser Busch reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Molson Coors and Anheuser Busch

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

The idea behind Molson Coors Brewing and Anheuser Busch InBev SANV 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.