Correlation Between ELECTRONIC ARTS and Molson Coors
Can any of the company-specific risk be diversified away by investing in both ELECTRONIC ARTS 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 ELECTRONIC ARTS and Molson Coors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECTRONIC ARTS and Molson Coors Beverage, you can compare the effects of market volatilities on ELECTRONIC ARTS 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 ELECTRONIC ARTS with a short position of Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTRONIC ARTS and Molson Coors.
Diversification Opportunities for ELECTRONIC ARTS and Molson Coors
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ELECTRONIC and Molson is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding ELECTRONIC ARTS 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 ELECTRONIC ARTS 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 ELECTRONIC ARTS 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 ELECTRONIC ARTS i.e., ELECTRONIC ARTS and Molson Coors go up and down completely randomly.
Pair Corralation between ELECTRONIC ARTS and Molson Coors
Assuming the 90 days trading horizon ELECTRONIC ARTS is expected to generate 1.06 times less return on investment than Molson Coors. But when comparing it to its historical volatility, ELECTRONIC ARTS is 1.71 times less risky than Molson Coors. It trades about 0.41 of its potential returns per unit of risk. Molson Coors Beverage is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 5,100 in Molson Coors Beverage on August 31, 2024 and sell it today you would earn a total of 682.00 from holding Molson Coors Beverage or generate 13.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELECTRONIC ARTS vs. Molson Coors Beverage
Performance |
| Timeline |
| ELECTRONIC ARTS |
| Molson Coors Beverage |
ELECTRONIC ARTS and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELECTRONIC ARTS and Molson Coors
The main advantage of trading using opposite ELECTRONIC ARTS and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECTRONIC ARTS 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.| ELECTRONIC ARTS vs. SIVERS SEMICONDUCTORS AB | ELECTRONIC ARTS vs. Darden Restaurants | ELECTRONIC ARTS vs. Reliance Steel Aluminum | ELECTRONIC ARTS vs. Q2M Managementberatung AG |
| Molson Coors vs. FORWARD AIR P | Molson Coors vs. BORR DRILLING NEW | Molson Coors vs. Consolidated Communications Holdings | Molson Coors vs. Charter Communications |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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