Correlation Between USS and MOLSON COORS

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

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

Diversification Opportunities for USS and MOLSON COORS

0.78

Correlation Coefficient

USS  MOLSON COORS

Poor diversification

The 3 months correlation between USS and MOLSON is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding USS Co 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 USS 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 USS Co 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 USS i.e., USS and MOLSON COORS go up and down completely randomly.

Pair Corralation between USS and MOLSON COORS

Assuming the 90 days horizon USS Co is expected to generate 0.54 times more return on investment than MOLSON COORS. However, USS Co is 1.84 times less risky than MOLSON COORS. It trades about 0.02 of its potential returns per unit of risk. MOLSON RS BEVERAGE is currently generating about -0.01 per unit of risk. If you would invest  740.00  in USS Co on October 24, 2024 and sell it today you would earn a total of  95.00  from holding USS Co or generate 12.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

USS Co  vs.  MOLSON RS BEVERAGE

USS Co

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in USS Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, USS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

MOLSON RS BEVERAGE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MOLSON RS BEVERAGE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MOLSON COORS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with USS and MOLSON COORS

The main advantage of trading using opposite USS and MOLSON COORS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USS 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 USS Co 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.