Correlation Between Molson Coors and BRIT AMER

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

Diversification Opportunities for Molson Coors and BRIT AMER

0.82

Correlation Coefficient

Molson Coors  BRIT AMER

Very poor diversification

The 3 months correlation between Molson and BRIT is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO 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 BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of Molson Coors i.e., Molson Coors and BRIT AMER go up and down completely randomly.

Pair Corralation between Molson Coors and BRIT AMER

Assuming the 90 days trading horizon Molson Coors Beverage is expected to under-perform the BRIT AMER. In addition to that, Molson Coors is 1.16 times more volatile than BRIT AMER TOBACCO. It trades about -0.11 of its total potential returns per unit of risk. BRIT AMER TOBACCO is currently generating about -0.12 per unit of volatility. If you would invest  3,523  in BRIT AMER TOBACCO on September 27, 2024 and sell it today you would lose (68.00) from holding BRIT AMER TOBACCO or give up 1.93% of portfolio value over 90 days.

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

Molson Coors Beverage  vs.  BRIT AMER TOBACCO

Molson Coors Beverage

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Molson Coors unveiled solid returns over the last few months and may actually be approaching a breakup point.

BRIT AMER TOBACCO

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BRIT AMER TOBACCO are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BRIT AMER is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Molson Coors and BRIT AMER

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

The idea behind Molson Coors Beverage and BRIT AMER TOBACCO 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.