Correlation Between E L and Molson Coors

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

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

Diversification Opportunities for E L and Molson Coors

0.75

Correlation Coefficient

E L  Molson Coors

Poor diversification

The 3 months correlation between ELF and Molson is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp 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 E L 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 E L Financial Corp 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 E L i.e., E L and Molson Coors go up and down completely randomly.

Pair Corralation between E L and Molson Coors

Assuming the 90 days trading horizon E L is expected to generate 1.76 times less return on investment than Molson Coors. But when comparing it to its historical volatility, E L Financial Corp is 1.2 times less risky than Molson Coors. It trades about 0.1 of its potential returns per unit of risk. Molson Coors Canada is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  7,732  in Molson Coors Canada on September 2, 2024 and sell it today you would earn a total of  968.00  from holding Molson Coors Canada or generate 12.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	82.81%
Values	Daily Returns

E L Financial Corp  vs.  Molson Coors Canada

E L Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in E L Financial Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, E L may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Molson Coors Canada

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Canada are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Molson Coors unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with E L and Molson Coors

The main advantage of trading using opposite E L and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L 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 E L Financial Corp 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.