Correlation Between Molson Coors and XBP Europe

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

Diversification Opportunities for Molson Coors and XBP Europe

0.39

Correlation Coefficient

Molson Coors  XBP Europe

Weak diversification

The 3 months correlation between Molson and XBP is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Brewing and XBP Europe Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XBP Europe Holdings 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 XBP Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XBP Europe Holdings has no effect on the direction of Molson Coors i.e., Molson Coors and XBP Europe go up and down completely randomly.

Pair Corralation between Molson Coors and XBP Europe

Considering the 90-day investment horizon Molson Coors Brewing is expected to generate 0.15 times more return on investment than XBP Europe. However, Molson Coors Brewing is 6.86 times less risky than XBP Europe. It trades about 0.03 of its potential returns per unit of risk. XBP Europe Holdings is currently generating about 0.0 per unit of risk. If you would invest  4,787  in Molson Coors Brewing on October 4, 2024 and sell it today you would earn a total of  945.00  from holding Molson Coors Brewing or generate 19.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Molson Coors Brewing  vs.  XBP Europe Holdings

Molson Coors Brewing

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Brewing are ranked lower than 3 (%) 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.

XBP Europe Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in XBP Europe Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental drivers, XBP Europe reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Molson Coors and XBP Europe

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

The idea behind Molson Coors Brewing and XBP Europe Holdings 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.