Correlation Between Visa and Molson Coors

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

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

Diversification Opportunities for Visa and Molson Coors

0.28

Correlation Coefficient

Visa  Molson Coors

Modest diversification

The 3 months correlation between Visa and Molson is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Molson Coors go up and down completely randomly.

Pair Corralation between Visa and Molson Coors

Taking into account the 90-day investment horizon Visa is expected to generate 2.17 times less return on investment than Molson Coors. But when comparing it to its historical volatility, Visa Class A is 1.09 times less risky than Molson Coors. It trades about 0.12 of its potential returns per unit of risk. Molson Coors Beverage is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  29,735  in Molson Coors Beverage on December 21, 2024 and sell it today you would earn a total of  4,784  from holding Molson Coors Beverage or generate 16.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.67%
Values	Daily Returns

Visa Class A  vs.  Molson Coors Beverage

Visa Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Molson Coors Beverage

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Molson Coors sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Molson Coors

The main advantage of trading using opposite Visa and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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 Visa Class A 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.