Correlation Between Buhler Industries and Molson Coors

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

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

Diversification Opportunities for Buhler Industries and Molson Coors

0.93

Correlation Coefficient

Buhler Industries  Molson Coors

Almost no diversification

The 3 months correlation between Buhler and Molson is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Buhler Industries and Molson Coors Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Canada and Buhler Industries 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 Buhler Industries 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 Canada has no effect on the direction of Buhler Industries i.e., Buhler Industries and Molson Coors go up and down completely randomly.

Pair Corralation between Buhler Industries and Molson Coors

Assuming the 90 days trading horizon Buhler Industries is expected to generate 1.67 times more return on investment than Molson Coors. However, Buhler Industries is 1.67 times more volatile than Molson Coors Canada. It trades about 0.14 of its potential returns per unit of risk. Molson Coors Canada is currently generating about 0.16 per unit of risk. If you would invest  240.00  in Buhler Industries on September 19, 2024 and sell it today you would earn a total of  55.00  from holding Buhler Industries or generate 22.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	79.37%
Values	Daily Returns

Buhler Industries  vs.  Molson Coors Canada

Buhler Industries

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Buhler Industries are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Buhler Industries displayed solid returns over the last few months and may actually be approaching a breakup point.

Molson Coors Canada

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Canada are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Molson Coors unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Buhler Industries and Molson Coors

The main advantage of trading using opposite Buhler Industries and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buhler Industries 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 Buhler Industries and Molson Coors Canada 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.