Correlation Between Carsales and Molson Coors
Can any of the company-specific risk be diversified away by investing in both Carsales 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 Carsales and Molson Coors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carsales and Molson Coors Beverage, you can compare the effects of market volatilities on Carsales 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 Carsales with a short position of Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Molson Coors.
Diversification Opportunities for Carsales and Molson Coors
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Carsales and Molson is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Carsales 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 Carsales 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 Carsales 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 Carsales i.e., Carsales and Molson Coors go up and down completely randomly.
Pair Corralation between Carsales and Molson Coors
Assuming the 90 days trading horizon Carsales is expected to under-perform the Molson Coors. But the stock apears to be less risky and, when comparing its historical volatility, Carsales is 1.17 times less risky than Molson Coors. The stock trades about -0.11 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 5,451 in Molson Coors Beverage on December 30, 2024 and sell it today you would earn a total of 179.00 from holding Molson Coors Beverage or generate 3.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Carsales vs. Molson Coors Beverage
Performance |
Timeline |
Carsales |
Molson Coors Beverage |
Carsales and Molson Coors Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Carsales and Molson Coors
The main advantage of trading using opposite Carsales and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales 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.Carsales vs. MCEWEN MINING INC | Carsales vs. DeVry Education Group | Carsales vs. CAREER EDUCATION | Carsales vs. IDP EDUCATION LTD |
Molson Coors vs. Kingdee International Software | Molson Coors vs. Axway Software SA | Molson Coors vs. COFCO Joycome Foods | Molson Coors vs. PSI Software AG |
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 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.
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