Correlation Between Molson Coors and Russel Metals

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

Diversification Opportunities for Molson Coors and Russel Metals

-0.42

Correlation Coefficient

Molson Coors  Russel Metals

Very good diversification

The 3 months correlation between Molson and Russel is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Canada and Russel Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Russel Metals 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 Russel Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Russel Metals has no effect on the direction of Molson Coors i.e., Molson Coors and Russel Metals go up and down completely randomly.

Pair Corralation between Molson Coors and Russel Metals

Assuming the 90 days trading horizon Molson Coors Canada is expected to generate 1.9 times more return on investment than Russel Metals. However, Molson Coors is 1.9 times more volatile than Russel Metals. It trades about 0.04 of its potential returns per unit of risk. Russel Metals is currently generating about -0.04 per unit of risk. If you would invest  8,282  in Molson Coors Canada on December 30, 2024 and sell it today you would earn a total of  318.00  from holding Molson Coors Canada or generate 3.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	73.44%
Values	Daily Returns

Molson Coors Canada  vs.  Russel Metals

Molson Coors Canada

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Canada are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Russel Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Russel Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Russel Metals is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Molson Coors and Russel Metals

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

The idea behind Molson Coors Canada and Russel Metals 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.