Correlation Between Molson Coors and Mondelez International

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

Diversification Opportunities for Molson Coors and Mondelez International

0.86

Correlation Coefficient

Molson Coors  Mondelez International

Very poor diversification

The 3 months correlation between Molson and Mondelez is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Brewing and Mondelez International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondelez International 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 Mondelez International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondelez International has no effect on the direction of Molson Coors i.e., Molson Coors and Mondelez International go up and down completely randomly.

Pair Corralation between Molson Coors and Mondelez International

Considering the 90-day investment horizon Molson Coors Brewing is expected to under-perform the Mondelez International. In addition to that, Molson Coors is 1.33 times more volatile than Mondelez International. It trades about 0.0 of its total potential returns per unit of risk. Mondelez International is currently generating about 0.03 per unit of volatility. If you would invest  6,444  in Mondelez International on November 28, 2024 and sell it today you would earn a total of  144.00  from holding Mondelez International or generate 2.23% return on investment over 90 days.

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

Molson Coors Brewing  vs.  Mondelez International

Molson Coors Brewing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Molson Coors Brewing has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Molson Coors is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Mondelez International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mondelez International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Mondelez International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Molson Coors and Mondelez International

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

The idea behind Molson Coors Brewing and Mondelez International 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.