Correlation Between Molson Coors and CCL Industries

Can any of the company-specific risk be diversified away by investing in both Molson Coors and CCL Industries 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 CCL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Molson Coors Canada and CCL Industries, you can compare the effects of market volatilities on Molson Coors and CCL Industries 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 CCL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and CCL Industries.

Diversification Opportunities for Molson Coors and CCL Industries

-0.78

Correlation Coefficient

Molson Coors  CCL Industries

Pay attention - limited upside

The 3 months correlation between Molson and CCL is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Canada and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries 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 Canada are associated (or correlated) with CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of Molson Coors i.e., Molson Coors and CCL Industries go up and down completely randomly.

Pair Corralation between Molson Coors and CCL Industries

Assuming the 90 days trading horizon Molson Coors Canada is expected to generate 1.29 times more return on investment than CCL Industries. However, Molson Coors is 1.29 times more volatile than CCL Industries. It trades about 0.16 of its potential returns per unit of risk. CCL Industries is currently generating about -0.09 per unit of risk. If you would invest  7,497  in Molson Coors Canada on October 4, 2024 and sell it today you would earn a total of  785.00  from holding Molson Coors Canada or generate 10.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	73.77%
Values	Daily Returns

Molson Coors Canada  vs.  CCL Industries

Molson Coors Canada

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Molson Coors Canada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unfluctuating basic indicators, Molson Coors unveiled solid returns over the last few months and may actually be approaching a breakup point.

CCL Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CCL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Molson Coors and CCL Industries

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

The idea behind Molson Coors Canada and CCL Industries 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 Valuation module to check real value of public entities based on technical and fundamental data.