Correlation Between Universal Display and Molson Coors

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

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

Diversification Opportunities for Universal Display and Molson Coors

0.27

Correlation Coefficient

Universal Display  Molson Coors

Modest diversification

The 3 months correlation between Universal and Molson is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and Molson Coors Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Beverage and Universal Display 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 Universal Display 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 Beverage has no effect on the direction of Universal Display i.e., Universal Display and Molson Coors go up and down completely randomly.

Pair Corralation between Universal Display and Molson Coors

Assuming the 90 days horizon Universal Display is expected to under-perform the Molson Coors. But the stock apears to be less risky and, when comparing its historical volatility, Universal Display is 1.02 times less risky than Molson Coors. The stock trades about 0.0 of its potential returns per unit of risk. The Molson Coors Beverage is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5,507  in Molson Coors Beverage on December 31, 2024 and sell it today you would earn a total of  123.00  from holding Molson Coors Beverage or generate 2.23% return on investment over 90 days.

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

Universal Display  vs.  Molson Coors Beverage

Universal Display

Risk-Adjusted Performance

Very Weak

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

Molson Coors Beverage

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Molson Coors is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Universal Display and Molson Coors

The main advantage of trading using opposite Universal Display and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display 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 Universal Display and Molson Coors 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.