Correlation Between National Beverage and Molson Coors
Can any of the company-specific risk be diversified away by investing in both National Beverage and Molson Coors 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 National Beverage and Molson Coors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and Molson Coors Beverage, you can compare the effects of market volatilities on National Beverage and Molson Coors 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 National Beverage with a short position of Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Molson Coors.
Diversification Opportunities for National Beverage and Molson Coors
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and Molson is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Molson Coors Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Beverage and National Beverage 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 National Beverage Corp are associated (or correlated) with Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Beverage has no effect on the direction of National Beverage i.e., National Beverage and Molson Coors go up and down completely randomly.
Pair Corralation between National Beverage and Molson Coors
Assuming the 90 days trading horizon National Beverage Corp is expected to generate 2.35 times more return on investment than Molson Coors. However, National Beverage is 2.35 times more volatile than Molson Coors Beverage. It trades about 0.02 of its potential returns per unit of risk. Molson Coors Beverage is currently generating about 0.03 per unit of risk. If you would invest 4,959 in National Beverage Corp on August 27, 2024 and sell it today you would lose (159.00) from holding National Beverage Corp or give up 3.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.35% |
| Values | Daily Returns |
National Beverage Corp vs. Molson Coors Beverage
Performance |
| Timeline |
| National Beverage Corp |
| Molson Coors Beverage |
National Beverage and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Molson Coors
The main advantage of trading using opposite National Beverage and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Molson Coors 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 Molson Coors will offset losses from the drop in Molson Coors' long position.| National Beverage vs. Bellevue Healthcare Trust | National Beverage vs. Inspiration Healthcare Group | National Beverage vs. Universal Health Services | National Beverage vs. Naturhouse Health SA |
| Molson Coors vs. Samsung Electronics Co | Molson Coors vs. Samsung Electronics Co | Molson Coors vs. Hyundai Motor | Molson Coors 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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