Correlation Between Molson Coors and Applied Materials
Can any of the company-specific risk be diversified away by investing in both Molson Coors and Applied Materials 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 Applied Materials 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 Applied Materials, you can compare the effects of market volatilities on Molson Coors and Applied Materials 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 Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and Applied Materials.
Diversification Opportunities for Molson Coors and Applied Materials
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Molson and Applied is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials 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 Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Molson Coors i.e., Molson Coors and Applied Materials go up and down completely randomly.
Pair Corralation between Molson Coors and Applied Materials
Assuming the 90 days trading horizon Molson Coors Beverage is expected to generate 0.61 times more return on investment than Applied Materials. However, Molson Coors Beverage is 1.64 times less risky than Applied Materials. It trades about 0.29 of its potential returns per unit of risk. Applied Materials is currently generating about 0.01 per unit of risk. If you would invest 5,573 in Molson Coors Beverage on September 4, 2024 and sell it today you would earn a total of 620.00 from holding Molson Coors Beverage or generate 11.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Molson Coors Beverage vs. Applied Materials
Performance |
| Timeline |
| Molson Coors Beverage |
| Applied Materials |
Molson Coors and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molson Coors and Applied Materials
The main advantage of trading using opposite Molson Coors and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.| Molson Coors vs. Samsung Electronics Co | Molson Coors vs. Samsung Electronics Co | Molson Coors vs. Hyundai Motor | Molson Coors vs. Toyota Motor Corp |
| Applied Materials vs. Samsung Electronics Co | Applied Materials vs. Samsung Electronics Co | Applied Materials vs. Hyundai Motor | Applied Materials vs. Toyota Motor Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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