Correlation Between Molson Coors and PREMIER FOODS

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

Diversification Opportunities for Molson Coors and PREMIER FOODS

0.43

Correlation Coefficient

Molson Coors  PREMIER FOODS

Very weak diversification

The 3 months correlation between Molson and PREMIER is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS 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 PREMIER FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PREMIER FOODS has no effect on the direction of Molson Coors i.e., Molson Coors and PREMIER FOODS go up and down completely randomly.

Pair Corralation between Molson Coors and PREMIER FOODS

Assuming the 90 days trading horizon Molson Coors Beverage is expected to under-perform the PREMIER FOODS. But the stock apears to be less risky and, when comparing its historical volatility, Molson Coors Beverage is 1.09 times less risky than PREMIER FOODS. The stock trades about -0.09 of its potential returns per unit of risk. The PREMIER FOODS is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  226.00  in PREMIER FOODS on September 24, 2024 and sell it today you would earn a total of  6.00  from holding PREMIER FOODS or generate 2.65% return on investment over 90 days.

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

Molson Coors Beverage  vs.  PREMIER FOODS

Molson Coors Beverage

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Molson Coors unveiled solid returns over the last few months and may actually be approaching a breakup point.

PREMIER FOODS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PREMIER FOODS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, PREMIER FOODS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Molson Coors and PREMIER FOODS

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

The idea behind Molson Coors Beverage and PREMIER FOODS 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.

Check out your portfolio center.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.