Correlation Between Molson Coors and Guaranty Trust

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

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

Diversification Opportunities for Molson Coors and Guaranty Trust

0.72

Correlation Coefficient

Molson Coors  Guaranty Trust

Poor diversification

The 3 months correlation between Molson and Guaranty is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and Guaranty Trust Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guaranty Trust Holding and Molson Coors 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 Molson Coors Beverage are associated (or correlated) with Guaranty Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guaranty Trust Holding has no effect on the direction of Molson Coors i.e., Molson Coors and Guaranty Trust go up and down completely randomly.

Pair Corralation between Molson Coors and Guaranty Trust

Assuming the 90 days trading horizon Molson Coors Beverage is expected to generate 0.66 times more return on investment than Guaranty Trust. However, Molson Coors Beverage is 1.51 times less risky than Guaranty Trust. It trades about 0.1 of its potential returns per unit of risk. Guaranty Trust Holding is currently generating about 0.0 per unit of risk. If you would invest  5,427  in Molson Coors Beverage on September 24, 2024 and sell it today you would earn a total of  459.00  from holding Molson Coors Beverage or generate 8.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Molson Coors Beverage  vs.  Guaranty Trust Holding

Molson Coors Beverage

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Guaranty Trust Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guaranty Trust Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Guaranty Trust is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Molson Coors and Guaranty Trust

The main advantage of trading using opposite Molson Coors and Guaranty Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, Guaranty Trust 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 Guaranty Trust will offset losses from the drop in Guaranty Trust's long position.

The idea behind Molson Coors Beverage and Guaranty Trust Holding 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.