Correlation Between Molson Coors and Bunge

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

By analyzing existing cross correlation between Molson Coors Brewing and Bunge Limited, you can compare the effects of market volatilities on Molson Coors and Bunge 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 Bunge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and Bunge.

Diversification Opportunities for Molson Coors and Bunge

-0.21

Correlation Coefficient

Molson Coors  Bunge

Very good diversification

The 3 months correlation between Molson and Bunge is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Brewing and Bunge Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunge Limited 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 Brewing are associated (or correlated) with Bunge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunge Limited has no effect on the direction of Molson Coors i.e., Molson Coors and Bunge go up and down completely randomly.

Pair Corralation between Molson Coors and Bunge

Considering the 90-day investment horizon Molson Coors Brewing is expected to generate 1.24 times more return on investment than Bunge. However, Molson Coors is 1.24 times more volatile than Bunge Limited. It trades about 0.06 of its potential returns per unit of risk. Bunge Limited is currently generating about 0.01 per unit of risk. If you would invest  5,645  in Molson Coors Brewing on December 28, 2024 and sell it today you would earn a total of  408.00  from holding Molson Coors Brewing or generate 7.23% return on investment over 90 days.

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

Molson Coors Brewing  vs.  Bunge Limited

Molson Coors Brewing

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Brewing are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Bunge Limited

Risk-Adjusted Performance

Weak

Over the last 90 days Bunge Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Bunge is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Molson Coors and Bunge

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

The idea behind Molson Coors Brewing and Bunge Limited 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.