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 Bank of America 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
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Molson is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America 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 Bank of America 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
If you would invest 6,828 in Bank of America on November 3, 2024 and sell it today you would lose (11.00) from holding Bank of America or give up 0.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Molson Coors Beverage
Performance |
| Timeline |
| Bank of America |
| 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. JPMorgan Chase Co | Bank of America vs. Citigroup | Bank of America vs. UBS Group AG | Bank of America vs. Pentair plc |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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