Correlation Between MOLSON COORS and Boston Beer

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

By analyzing existing cross correlation between MOLSON RS BEVERAGE and The Boston Beer, you can compare the effects of market volatilities on MOLSON COORS and Boston Beer 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 Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOLSON COORS and Boston Beer.

Diversification Opportunities for MOLSON COORS and Boston Beer

0.85

Correlation Coefficient

MOLSON COORS  Boston Beer

Very poor diversification

The 3 months correlation between MOLSON and Boston is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding MOLSON RS BEVERAGE and The Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 RS BEVERAGE are associated (or correlated) with Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of MOLSON COORS i.e., MOLSON COORS and Boston Beer go up and down completely randomly.

Pair Corralation between MOLSON COORS and Boston Beer

Assuming the 90 days trading horizon MOLSON RS BEVERAGE is expected to under-perform the Boston Beer. In addition to that, MOLSON COORS is 1.2 times more volatile than The Boston Beer. It trades about -0.01 of its total potential returns per unit of risk. The Boston Beer is currently generating about 0.0 per unit of volatility. If you would invest  32,935  in The Boston Beer on October 7, 2024 and sell it today you would lose (4,935) from holding The Boston Beer or give up 14.98% of portfolio value over 90 days.

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

MOLSON RS BEVERAGE  vs.  The Boston Beer

MOLSON RS BEVERAGE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MOLSON RS BEVERAGE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MOLSON COORS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Boston Beer

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Boston Beer are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Boston Beer reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MOLSON COORS and Boston Beer

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

The idea behind MOLSON RS BEVERAGE and The Boston Beer 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.