Correlation Between Molson Coors and Summit Hotel

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

By analyzing existing cross correlation between Molson Coors Brewing and Summit Hotel Properties, you can compare the effects of market volatilities on Molson Coors and Summit Hotel 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 Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and Summit Hotel.

Diversification Opportunities for Molson Coors and Summit Hotel

0.05

Correlation Coefficient

Molson Coors  Summit Hotel

Significant diversification

The 3 months correlation between Molson and Summit is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Brewing and Summit Hotel Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Hotel Properties 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 Brewing are associated (or correlated) with Summit Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Hotel Properties has no effect on the direction of Molson Coors i.e., Molson Coors and Summit Hotel go up and down completely randomly.

Pair Corralation between Molson Coors and Summit Hotel

Considering the 90-day investment horizon Molson Coors Brewing is expected to under-perform the Summit Hotel. But the stock apears to be less risky and, when comparing its historical volatility, Molson Coors Brewing is 2.77 times less risky than Summit Hotel. The stock trades about -0.13 of its potential returns per unit of risk. The Summit Hotel Properties is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  623.00  in Summit Hotel Properties on September 15, 2024 and sell it today you would earn a total of  47.00  from holding Summit Hotel Properties or generate 7.54% return on investment over 90 days.

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

Molson Coors Brewing  vs.  Summit Hotel Properties

Molson Coors Brewing

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Brewing are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Summit Hotel Properties

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Hotel Properties are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Summit Hotel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Molson Coors and Summit Hotel

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

The idea behind Molson Coors Brewing and Summit Hotel Properties 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 Global Correlations module to find global opportunities by holding instruments from different markets.