Correlation Between Molson Coors and New Providence

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

Diversification Opportunities for Molson Coors and New Providence

0.1

Correlation Coefficient

Molson Coors  New Providence

Average diversification

The 3 months correlation between Molson and New is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Brewing and New Providence Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Providence Acqui 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 New Providence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Providence Acqui has no effect on the direction of Molson Coors i.e., Molson Coors and New Providence go up and down completely randomly.

Pair Corralation between Molson Coors and New Providence

Considering the 90-day investment horizon Molson Coors is expected to generate 443.5 times less return on investment than New Providence. But when comparing it to its historical volatility, Molson Coors Brewing is 1.98 times less risky than New Providence. It trades about 0.0 of its potential returns per unit of risk. New Providence Acquisition is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,050  in New Providence Acquisition on September 28, 2024 and sell it today you would earn a total of  170.00  from holding New Providence Acquisition or generate 16.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.66%
Values	Daily Returns

Molson Coors Brewing  vs.  New Providence Acquisition

Molson Coors Brewing

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Brewing are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

New Providence Acqui

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days New Providence Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, New Providence is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Molson Coors and New Providence

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

The idea behind Molson Coors Brewing and New Providence Acquisition 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .