Correlation Between Bank of America and Molson Coors
Can any of the company-specific risk be diversified away by investing in both Bank of America 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 Bank of America and Molson Coors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Molson Coors Beverage, you can compare the effects of market volatilities on Bank of America 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 Bank of America with a short position of Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Molson Coors.
Diversification Opportunities for Bank of America and Molson Coors
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Molson is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications 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 Bank of America 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 Verizon Communications 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 Bank of America i.e., Bank of America and Molson Coors go up and down completely randomly.
Pair Corralation between Bank of America and Molson Coors
Assuming the 90 days trading horizon Bank of America is expected to generate 1.1 times less return on investment than Molson Coors. But when comparing it to its historical volatility, Verizon Communications is 2.64 times less risky than Molson Coors. It trades about 0.43 of its potential returns per unit of risk. Molson Coors Beverage is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 5,372 in Molson Coors Beverage on November 28, 2024 and sell it today you would earn a total of 504.00 from holding Molson Coors Beverage or generate 9.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. Molson Coors Beverage
Performance |
| Timeline |
| Verizon Communications |
| Molson Coors Beverage |
Bank of America and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Molson Coors
The main advantage of trading using opposite Bank of America and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America 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.| Bank of America vs. CENTURIA OFFICE REIT | Bank of America vs. Aedas Homes SA | Bank of America vs. DFS Furniture PLC | Bank of America vs. British American Tobacco |
| Molson Coors vs. COFCO Joycome Foods | Molson Coors vs. Fevertree Drinks PLC | Molson Coors vs. PLANT VEDA FOODS | Molson Coors vs. Moneysupermarket Group PLC |
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 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..
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