Correlation Between Molson Coors and National Storage

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

Diversification Opportunities for Molson Coors and National Storage

-0.19

Correlation Coefficient

Molson Coors  National Storage

Good diversification

The 3 months correlation between Molson and National is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Brewing and National Storage REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storage REIT 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 National Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storage REIT has no effect on the direction of Molson Coors i.e., Molson Coors and National Storage go up and down completely randomly.

Pair Corralation between Molson Coors and National Storage

Considering the 90-day investment horizon Molson Coors Brewing is expected to generate 1.57 times more return on investment than National Storage. However, Molson Coors is 1.57 times more volatile than National Storage REIT. It trades about 0.01 of its potential returns per unit of risk. National Storage REIT is currently generating about -0.13 per unit of risk. If you would invest  5,889  in Molson Coors Brewing on December 20, 2024 and sell it today you would earn a total of  10.00  from holding Molson Coors Brewing or generate 0.17% 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.  National Storage REIT

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.

National Storage REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Storage REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Molson Coors and National Storage

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

The idea behind Molson Coors Brewing and National Storage REIT 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.