Correlation Between MOLSON COORS and Thyssenkrupp

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

Diversification Opportunities for MOLSON COORS and Thyssenkrupp

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between MOLSON and Thyssenkrupp is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding MOLSON RS BEVERAGE and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of MOLSON COORS i.e., MOLSON COORS and Thyssenkrupp go up and down completely randomly.

Pair Corralation between MOLSON COORS and Thyssenkrupp

Assuming the 90 days trading horizon MOLSON RS BEVERAGE is expected to generate 0.78 times more return on investment than Thyssenkrupp. However, MOLSON RS BEVERAGE is 1.29 times less risky than Thyssenkrupp. It trades about -0.1 of its potential returns per unit of risk. thyssenkrupp AG is currently generating about -0.11 per unit of risk. If you would invest  5,550  in MOLSON RS BEVERAGE on October 10, 2024 and sell it today you would lose (150.00) from holding MOLSON RS BEVERAGE or give up 2.7% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

MOLSON RS BEVERAGE  vs.  thyssenkrupp AG

 Performance 
       Timeline  
MOLSON RS BEVERAGE 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.
thyssenkrupp AG 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in thyssenkrupp AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Thyssenkrupp reported solid returns over the last few months and may actually be approaching a breakup point.

MOLSON COORS and Thyssenkrupp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MOLSON COORS and Thyssenkrupp

The main advantage of trading using opposite MOLSON COORS and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOLSON COORS position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.
The idea behind MOLSON RS BEVERAGE and thyssenkrupp AG 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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