Correlation Between URBAN OUTFITTERS and MOLSON COORS

Can any of the company-specific risk be diversified away by investing in both URBAN OUTFITTERS and MOLSON COORS 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 URBAN OUTFITTERS and MOLSON COORS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between URBAN OUTFITTERS and MOLSON RS BEVERAGE, you can compare the effects of market volatilities on URBAN OUTFITTERS and MOLSON COORS 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 URBAN OUTFITTERS with a short position of MOLSON COORS. Check out your portfolio center. Please also check ongoing floating volatility patterns of URBAN OUTFITTERS and MOLSON COORS.

Diversification Opportunities for URBAN OUTFITTERS and MOLSON COORS

0.81

Correlation Coefficient

URBAN OUTFITTERS  MOLSON COORS

Very poor diversification

The 3 months correlation between URBAN and MOLSON is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding URBAN OUTFITTERS and MOLSON RS BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOLSON RS BEVERAGE and URBAN OUTFITTERS 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 URBAN OUTFITTERS are associated (or correlated) with MOLSON COORS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOLSON RS BEVERAGE has no effect on the direction of URBAN OUTFITTERS i.e., URBAN OUTFITTERS and MOLSON COORS go up and down completely randomly.

Pair Corralation between URBAN OUTFITTERS and MOLSON COORS

Assuming the 90 days trading horizon URBAN OUTFITTERS is expected to generate 1.41 times more return on investment than MOLSON COORS. However, URBAN OUTFITTERS is 1.41 times more volatile than MOLSON RS BEVERAGE. It trades about 0.33 of its potential returns per unit of risk. MOLSON RS BEVERAGE is currently generating about -0.03 per unit of risk. If you would invest  4,920  in URBAN OUTFITTERS on October 5, 2024 and sell it today you would earn a total of  580.00  from holding URBAN OUTFITTERS or generate 11.79% return on investment over 90 days.

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

URBAN OUTFITTERS  vs.  MOLSON RS BEVERAGE

URBAN OUTFITTERS

Risk-Adjusted Performance

0 of 100

Solid

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

MOLSON RS BEVERAGE

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days MOLSON RS BEVERAGE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, MOLSON COORS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with URBAN OUTFITTERS and MOLSON COORS

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

The idea behind URBAN OUTFITTERS and MOLSON RS BEVERAGE 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .