Correlation Between Brookfield and Molson Coors

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

By analyzing existing cross correlation between Brookfield Residential 625 and Molson Coors Brewing, you can compare the effects of market volatilities on Brookfield 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 Brookfield with a short position of Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield and Molson Coors.

Diversification Opportunities for Brookfield and Molson Coors

-0.38

Correlation Coefficient

Brookfield  Molson Coors

Very good diversification

The 3 months correlation between Brookfield and Molson is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Residential 625 and Molson Coors Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Brewing and Brookfield 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 Brookfield Residential 625 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 Coors Brewing has no effect on the direction of Brookfield i.e., Brookfield and Molson Coors go up and down completely randomly.

Pair Corralation between Brookfield and Molson Coors

Assuming the 90 days trading horizon Brookfield Residential 625 is expected to under-perform the Molson Coors. But the bond apears to be less risky and, when comparing its historical volatility, Brookfield Residential 625 is 1.08 times less risky than Molson Coors. The bond trades about -0.01 of its potential returns per unit of risk. The Molson Coors Brewing is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5,392  in Molson Coors Brewing on September 12, 2024 and sell it today you would earn a total of  767.00  from holding Molson Coors Brewing or generate 14.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	82.54%
Values	Daily Returns

Brookfield Residential 625  vs.  Molson Coors Brewing

Brookfield Residential

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brookfield Residential 625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Brookfield is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Molson Coors Brewing

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Brewing are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Molson Coors reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brookfield and Molson Coors

The main advantage of trading using opposite Brookfield and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield 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' long position.

The idea behind Brookfield Residential 625 and Molson Coors Brewing 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.