Correlation Between Molson Coors and Snowflake

Can any of the company-specific risk be diversified away by investing in both Molson Coors and Snowflake 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 Snowflake 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 Snowflake, you can compare the effects of market volatilities on Molson Coors and Snowflake 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 Snowflake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and Snowflake.

Diversification Opportunities for Molson Coors and Snowflake

0.81

Correlation Coefficient

Molson Coors  Snowflake

Very poor diversification

The 3 months correlation between Molson and Snowflake is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and Snowflake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snowflake 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 Snowflake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snowflake has no effect on the direction of Molson Coors i.e., Molson Coors and Snowflake go up and down completely randomly.

Pair Corralation between Molson Coors and Snowflake

Assuming the 90 days trading horizon Molson Coors is expected to generate 4.94 times less return on investment than Snowflake. But when comparing it to its historical volatility, Molson Coors Beverage is 2.89 times less risky than Snowflake. It trades about 0.09 of its potential returns per unit of risk. Snowflake is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  10,272  in Snowflake on September 30, 2024 and sell it today you would earn a total of  4,952  from holding Snowflake or generate 48.21% return on investment over 90 days.

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

Molson Coors Beverage  vs.  Snowflake

Molson Coors Beverage

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Snowflake

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Snowflake are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Snowflake reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Molson Coors and Snowflake

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

The idea behind Molson Coors Beverage and Snowflake 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.