Correlation Between Molson Coors and USS

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

Diversification Opportunities for Molson Coors and USS

0.59

Correlation Coefficient

Molson Coors  USS

Very weak diversification

The 3 months correlation between Molson and USS is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and USS Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USS Co 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 USS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USS Co has no effect on the direction of Molson Coors i.e., Molson Coors and USS go up and down completely randomly.

Pair Corralation between Molson Coors and USS

Assuming the 90 days trading horizon Molson Coors Beverage is expected to under-perform the USS. In addition to that, Molson Coors is 1.04 times more volatile than USS Co. It trades about -0.37 of its total potential returns per unit of risk. USS Co is currently generating about -0.23 per unit of volatility. If you would invest  850.00  in USS Co on October 9, 2024 and sell it today you would lose (40.00) from holding USS Co or give up 4.71% of portfolio value over 90 days.

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

Molson Coors Beverage  vs.  USS Co

Molson Coors Beverage

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in February 2025.

USS Co

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in USS Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, USS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Molson Coors and USS

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

The idea behind Molson Coors Beverage and USS Co 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.