Correlation Between Sirius and Molson Coors

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

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

Diversification Opportunities for Sirius and Molson Coors

0.0

Correlation Coefficient

Sirius  Molson Coors

Pay attention - limited upside

The 3 months correlation between Sirius and Molson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sirius XM Holdings 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 Sirius 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 Sirius XM Holdings 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 Sirius i.e., Sirius and Molson Coors go up and down completely randomly.

Pair Corralation between Sirius and Molson Coors

Assuming the 90 days trading horizon Sirius is expected to generate 6.03 times less return on investment than Molson Coors. But when comparing it to its historical volatility, Sirius XM Holdings is 2.09 times less risky than Molson Coors. It trades about 0.01 of its potential returns per unit of risk. Molson Coors Brewing is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,943  in Molson Coors Brewing on October 13, 2024 and sell it today you would earn a total of  301.00  from holding Molson Coors Brewing or generate 6.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.31%
Values	Daily Returns

Sirius XM Holdings  vs.  Molson Coors Brewing

Sirius XM Holdings

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Sirius XM Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sirius 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

0 of 100

Weak

Over the last 90 days Molson Coors Brewing has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Molson Coors is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Sirius and Molson Coors

The main advantage of trading using opposite Sirius and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sirius 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 Sirius XM Holdings 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.