Correlation Between Molson Coors and MCAN Mortgage

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

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

Diversification Opportunities for Molson Coors and MCAN Mortgage

0.84

Correlation Coefficient

Molson Coors  MCAN Mortgage

Very poor diversification

The 3 months correlation between Molson and MCAN is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Canada and MCAN Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCAN Mortgage 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 Canada are associated (or correlated) with MCAN Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCAN Mortgage has no effect on the direction of Molson Coors i.e., Molson Coors and MCAN Mortgage go up and down completely randomly.

Pair Corralation between Molson Coors and MCAN Mortgage

Assuming the 90 days trading horizon Molson Coors is expected to generate 2.26 times less return on investment than MCAN Mortgage. But when comparing it to its historical volatility, Molson Coors Canada is 1.04 times less risky than MCAN Mortgage. It trades about 0.09 of its potential returns per unit of risk. MCAN Mortgage is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,825  in MCAN Mortgage on September 12, 2024 and sell it today you would earn a total of  133.00  from holding MCAN Mortgage or generate 7.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	77.27%
Values	Daily Returns

Molson Coors Canada  vs.  MCAN Mortgage

Molson Coors Canada

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Canada are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Molson Coors unveiled solid returns over the last few months and may actually be approaching a breakup point.

MCAN Mortgage

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MCAN Mortgage are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, MCAN Mortgage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Molson Coors and MCAN Mortgage

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

The idea behind Molson Coors Canada and MCAN Mortgage 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..