Correlation Between MOLSON RS and Molson Coors

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

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

Diversification Opportunities for MOLSON RS and Molson Coors

0.99

Correlation Coefficient

MOLSON RS  Molson Coors

No risk reduction

The 3 months correlation between MOLSON and Molson is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding MOLSON RS CDA and Molson Coors Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Brewing and MOLSON RS 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 RS CDA 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 Brewing has no effect on the direction of MOLSON RS i.e., MOLSON RS and Molson Coors go up and down completely randomly.

Pair Corralation between MOLSON RS and Molson Coors

Assuming the 90 days horizon MOLSON RS is expected to generate 1.0 times less return on investment than Molson Coors. In addition to that, MOLSON RS is 1.06 times more volatile than Molson Coors Brewing. It trades about 0.16 of its total potential returns per unit of risk. Molson Coors Brewing is currently generating about 0.17 per unit of volatility. If you would invest  4,814  in Molson Coors Brewing on September 23, 2024 and sell it today you would earn a total of  798.00  from holding Molson Coors Brewing or generate 16.58% return on investment over 90 days.

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

MOLSON RS CDA  vs.  Molson Coors Brewing

MOLSON RS CDA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MOLSON RS CDA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MOLSON RS reported solid returns over the last few months and may actually be approaching a breakup point.

Molson Coors Brewing

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Brewing are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Molson Coors reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MOLSON RS and Molson Coors

The main advantage of trading using opposite MOLSON RS and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOLSON RS 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 MOLSON RS CDA and Molson Coors Brewing 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.