Correlation Between Transportadora and Molson Coors

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

By analyzing existing cross correlation between Transportadora de Gas and Molson Coors Beverage, you can compare the effects of market volatilities on Transportadora and Molson Coors 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 Transportadora with a short position of Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and Molson Coors.

Diversification Opportunities for Transportadora and Molson Coors

0.88

Correlation Coefficient

Transportadora  Molson Coors

Very poor diversification

The 3 months correlation between Transportadora and Molson is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Molson Coors Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Beverage and Transportadora 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 Transportadora de Gas are associated (or correlated) with Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Beverage has no effect on the direction of Transportadora i.e., Transportadora and Molson Coors go up and down completely randomly.

Pair Corralation between Transportadora and Molson Coors

Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 2.45 times more return on investment than Molson Coors. However, Transportadora is 2.45 times more volatile than Molson Coors Beverage. It trades about 0.16 of its potential returns per unit of risk. Molson Coors Beverage is currently generating about 0.17 per unit of risk. If you would invest  1,830  in Transportadora de Gas on September 12, 2024 and sell it today you would earn a total of  810.00  from holding Transportadora de Gas or generate 44.26% return on investment over 90 days.

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

Transportadora de Gas  vs.  Molson Coors Beverage

Transportadora de Gas

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward-looking signals, Transportadora reported solid returns over the last few months and may actually be approaching a breakup point.

Molson Coors Beverage

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 13 (%) 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.

Pair Trading with Transportadora and Molson Coors

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

The idea behind Transportadora de Gas and Molson Coors Beverage 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.