Correlation Between Molson Coors and Nabors Energy

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

Diversification Opportunities for Molson Coors and Nabors Energy

0.85

Correlation Coefficient

Molson Coors  Nabors Energy

Very poor diversification

The 3 months correlation between Molson and Nabors is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Brewing and Nabors Energy Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Energy Transition 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 Nabors Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Energy Transition has no effect on the direction of Molson Coors i.e., Molson Coors and Nabors Energy go up and down completely randomly.

Pair Corralation between Molson Coors and Nabors Energy

Considering the 90-day investment horizon Molson Coors is expected to generate 132.29 times less return on investment than Nabors Energy. But when comparing it to its historical volatility, Molson Coors Brewing is 10.09 times less risky than Nabors Energy. It trades about 0.01 of its potential returns per unit of risk. Nabors Energy Transition is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Nabors Energy Transition on December 20, 2024 and sell it today you would earn a total of  27.75  from holding Nabors Energy Transition or generate 163.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	81.67%
Values	Daily Returns

Molson Coors Brewing  vs.  Nabors Energy Transition

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.

Nabors Energy Transition

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nabors Energy Transition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Nabors Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Molson Coors and Nabors Energy

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

The idea behind Molson Coors Brewing and Nabors Energy Transition 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.