Correlation Between MOLSON COORS and National Grid

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

Diversification Opportunities for MOLSON COORS and National Grid

-0.31

Correlation Coefficient

MOLSON COORS  National Grid

Very good diversification

The 3 months correlation between MOLSON and National is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding MOLSON RS BEVERAGE and National Grid plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Grid plc 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 National Grid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Grid plc has no effect on the direction of MOLSON COORS i.e., MOLSON COORS and National Grid go up and down completely randomly.

Pair Corralation between MOLSON COORS and National Grid

Assuming the 90 days trading horizon MOLSON RS BEVERAGE is expected to under-perform the National Grid. In addition to that, MOLSON COORS is 1.2 times more volatile than National Grid plc. It trades about 0.0 of its total potential returns per unit of risk. National Grid plc is currently generating about 0.03 per unit of volatility. If you would invest  5,267  in National Grid plc on October 23, 2024 and sell it today you would earn a total of  733.00  from holding National Grid plc or generate 13.92% return on investment over 90 days.

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

MOLSON RS BEVERAGE  vs.  National Grid plc

MOLSON RS BEVERAGE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MOLSON RS BEVERAGE are ranked lower than 1 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

National Grid plc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Grid plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, National Grid 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 National Grid

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

The idea behind MOLSON RS BEVERAGE and National Grid plc 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 Stocks Directory module to find actively traded stocks across global markets.