Correlation Between Molson Coors and Molson Coors

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

Diversification Opportunities for Molson Coors and Molson Coors

0.83

Correlation Coefficient

Molson Coors  Molson Coors

Very poor diversification

The 3 months correlation between Molson and Molson is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Brewing and Molson Coors Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Beverage 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Beverage has no effect on the direction of Molson Coors i.e., Molson Coors and Molson Coors go up and down completely randomly.

Pair Corralation between Molson Coors and Molson Coors

Considering the 90-day investment horizon Molson Coors Brewing is expected to under-perform the Molson Coors. But the stock apears to be less risky and, when comparing its historical volatility, Molson Coors Brewing is 1.3 times less risky than Molson Coors. The stock trades about 0.0 of its potential returns per unit of risk. The Molson Coors Beverage is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5,956  in Molson Coors Beverage on November 28, 2024 and sell it today you would earn a total of  69.00  from holding Molson Coors Beverage or generate 1.16% 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.  Molson Coors Beverage

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.

Molson Coors Beverage

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Molson Coors is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Molson Coors and Molson Coors

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

The idea behind Molson Coors Brewing and Molson Coors Beverage 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.