Correlation Between Molson Coors and DOLLAR

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

Diversification Opportunities for Molson Coors and DOLLAR

0.37

Correlation Coefficient

Molson Coors  DOLLAR

Weak diversification

The 3 months correlation between Molson and DOLLAR is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Brewing and DOLLAR TREE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOLLAR TREE INC 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 DOLLAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOLLAR TREE INC has no effect on the direction of Molson Coors i.e., Molson Coors and DOLLAR go up and down completely randomly.

Pair Corralation between Molson Coors and DOLLAR

Considering the 90-day investment horizon Molson Coors Brewing is expected to under-perform the DOLLAR. In addition to that, Molson Coors is 17.01 times more volatile than DOLLAR TREE INC. It trades about -0.17 of its total potential returns per unit of risk. DOLLAR TREE INC is currently generating about 0.1 per unit of volatility. If you would invest  9,966  in DOLLAR TREE INC on October 23, 2024 and sell it today you would earn a total of  20.00  from holding DOLLAR TREE INC or generate 0.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Molson Coors Brewing  vs.  DOLLAR TREE INC

Molson Coors Brewing

Risk-Adjusted Performance

0 of 100

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.

DOLLAR TREE INC

Risk-Adjusted Performance

5 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DOLLAR TREE INC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, DOLLAR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Molson Coors and DOLLAR

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

The idea behind Molson Coors Brewing and DOLLAR TREE INC 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.