Correlation Between Molson Coors and PROVIDENCE

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

Diversification Opportunities for Molson Coors and PROVIDENCE

0.35

Correlation Coefficient

Molson Coors  PROVIDENCE

Weak diversification

The 3 months correlation between Molson and PROVIDENCE is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Brewing and PROVIDENCE HEALTH SVCS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROVIDENCE HEALTH SVCS 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 PROVIDENCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROVIDENCE HEALTH SVCS has no effect on the direction of Molson Coors i.e., Molson Coors and PROVIDENCE go up and down completely randomly.

Pair Corralation between Molson Coors and PROVIDENCE

Considering the 90-day investment horizon Molson Coors is expected to generate 1.79 times less return on investment than PROVIDENCE. But when comparing it to its historical volatility, Molson Coors Brewing is 1.59 times less risky than PROVIDENCE. It trades about 0.03 of its potential returns per unit of risk. PROVIDENCE HEALTH SVCS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7,975  in PROVIDENCE HEALTH SVCS on October 10, 2024 and sell it today you would earn a total of  75.00  from holding PROVIDENCE HEALTH SVCS or generate 0.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	26.23%
Values	Daily Returns

Molson Coors Brewing  vs.  PROVIDENCE HEALTH SVCS

Molson Coors Brewing

Risk-Adjusted Performance

2 of 100

Insignificant

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.

PROVIDENCE HEALTH SVCS

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PROVIDENCE HEALTH SVCS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PROVIDENCE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Molson Coors and PROVIDENCE

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

The idea behind Molson Coors Brewing and PROVIDENCE HEALTH SVCS 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.