Correlation Between Molson Coors and NOW
Can any of the company-specific risk be diversified away by investing in both Molson Coors and NOW 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 NOW 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 NOW Inc, you can compare the effects of market volatilities on Molson Coors and NOW 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 NOW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and NOW.
Diversification Opportunities for Molson Coors and NOW
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Molson and NOW is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and NOW Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOW Inc 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 NOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOW Inc has no effect on the direction of Molson Coors i.e., Molson Coors and NOW go up and down completely randomly.
Pair Corralation between Molson Coors and NOW
Assuming the 90 days trading horizon Molson Coors is expected to generate 6.83 times less return on investment than NOW. But when comparing it to its historical volatility, Molson Coors Beverage is 1.82 times less risky than NOW. It trades about 0.01 of its potential returns per unit of risk. NOW Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,115 in NOW Inc on September 14, 2024 and sell it today you would earn a total of 345.00 from holding NOW Inc or generate 30.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.63% |
| Values | Daily Returns |
Molson Coors Beverage vs. NOW Inc
Performance |
| Timeline |
| Molson Coors Beverage |
| NOW Inc |
Molson Coors and NOW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molson Coors and NOW
The main advantage of trading using opposite Molson Coors and NOW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, NOW 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 NOW will offset losses from the drop in NOW's long position.| Molson Coors vs. Evolution Gaming Group | Molson Coors vs. Air Products Chemicals | Molson Coors vs. PureTech Health plc | Molson Coors vs. Universal Health Services |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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