Correlation Between Ambev SA and Molson Coors
Can any of the company-specific risk be diversified away by investing in both Ambev SA 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 Ambev SA and Molson Coors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambev SA ADR and Molson Coors Beverage, you can compare the effects of market volatilities on Ambev SA 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 Ambev SA with a short position of Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Molson Coors.
Diversification Opportunities for Ambev SA and Molson Coors
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ambev and Molson is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR 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 Ambev SA 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 Ambev SA ADR 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 Ambev SA i.e., Ambev SA and Molson Coors go up and down completely randomly.
Pair Corralation between Ambev SA and Molson Coors
Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the Molson Coors. But the stock apears to be less risky and, when comparing its historical volatility, Ambev SA ADR is 1.2 times less risky than Molson Coors. The stock trades about -0.01 of its potential returns per unit of risk. The Molson Coors Beverage is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5,810 in Molson Coors Beverage on August 24, 2024 and sell it today you would earn a total of 190.00 from holding Molson Coors Beverage or generate 3.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambev SA ADR vs. Molson Coors Beverage
Performance |
| Timeline |
| Ambev SA ADR |
| Molson Coors Beverage |
Ambev SA and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and Molson Coors
The main advantage of trading using opposite Ambev SA and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA 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.| Ambev SA vs. Molson Coors Beverage | Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Tsingtao Brewery Co | Ambev SA vs. Carlsberg AS |
| Molson Coors vs. Compania Cervecerias Unidas | Molson Coors vs. Boston Beer | Molson Coors vs. Ambev SA ADR | Molson Coors vs. Molson Coors Brewing |
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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