Correlation Between Molson Coors and IGM Financial

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

Diversification Opportunities for Molson Coors and IGM Financial

0.92

Correlation Coefficient

Molson Coors  IGM Financial

Almost no diversification

The 3 months correlation between Molson and IGM is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Canada and IGM Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGM Financial 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 IGM Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGM Financial has no effect on the direction of Molson Coors i.e., Molson Coors and IGM Financial go up and down completely randomly.

Pair Corralation between Molson Coors and IGM Financial

Assuming the 90 days trading horizon Molson Coors is expected to generate 1.05 times less return on investment than IGM Financial. In addition to that, Molson Coors is 1.79 times more volatile than IGM Financial. It trades about 0.22 of its total potential returns per unit of risk. IGM Financial is currently generating about 0.41 per unit of volatility. If you would invest  3,819  in IGM Financial on September 13, 2024 and sell it today you would earn a total of  965.00  from holding IGM Financial or generate 25.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	79.37%
Values	Daily Returns

Molson Coors Canada  vs.  IGM Financial

Molson Coors Canada

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Canada are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Molson Coors unveiled solid returns over the last few months and may actually be approaching a breakup point.

IGM Financial

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in IGM Financial are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, IGM Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Molson Coors and IGM Financial

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

The idea behind Molson Coors Canada and IGM Financial 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.