Correlation Between Bunge and Molson Coors
Can any of the company-specific risk be diversified away by investing in both Bunge 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 Bunge and Molson Coors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunge Limited and Molson Coors Beverage, you can compare the effects of market volatilities on Bunge 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 Bunge with a short position of Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunge and Molson Coors.
Diversification Opportunities for Bunge and Molson Coors
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bunge and Molson is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited 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 Bunge 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 Bunge Limited 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 Bunge i.e., Bunge and Molson Coors go up and down completely randomly.
Pair Corralation between Bunge and Molson Coors
Allowing for the 90-day total investment horizon Bunge Limited is expected to under-perform the Molson Coors. But the stock apears to be less risky and, when comparing its historical volatility, Bunge Limited is 2.11 times less risky than Molson Coors. The stock trades about -0.3 of its potential returns per unit of risk. The Molson Coors Beverage is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 5,500 in Molson Coors Beverage on November 18, 2024 and sell it today you would earn a total of 676.00 from holding Molson Coors Beverage or generate 12.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bunge Limited vs. Molson Coors Beverage
Performance |
| Timeline |
| Bunge Limited |
| Molson Coors Beverage |
Bunge and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunge and Molson Coors
The main advantage of trading using opposite Bunge and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunge 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.The idea behind Bunge Limited and Molson Coors Beverage pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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