Correlation Between Ford and MOLSON COORS
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and MOLSON COORS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and MOLSON RS BEVERAGE, you can compare the effects of market volatilities on Ford 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 Ford with a short position of MOLSON COORS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and MOLSON COORS.
Diversification Opportunities for Ford and MOLSON COORS
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and MOLSON is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and MOLSON RS BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOLSON RS BEVERAGE and Ford 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 Ford Motor 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 RS BEVERAGE has no effect on the direction of Ford i.e., Ford and MOLSON COORS go up and down completely randomly.
Pair Corralation between Ford and MOLSON COORS
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.96 times more return on investment than MOLSON COORS. However, Ford Motor is 1.04 times less risky than MOLSON COORS. It trades about 0.02 of its potential returns per unit of risk. MOLSON RS BEVERAGE is currently generating about 0.02 per unit of risk. If you would invest 1,095 in Ford Motor on August 28, 2024 and sell it today you would earn a total of 45.00 from holding Ford Motor or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.05% |
| Values | Daily Returns |
Ford Motor vs. MOLSON RS BEVERAGE
Performance |
| Timeline |
| Ford Motor |
| MOLSON RS BEVERAGE |
Ford and MOLSON COORS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and MOLSON COORS
The main advantage of trading using opposite Ford and MOLSON COORS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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's long position.The idea behind Ford Motor and MOLSON RS 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. STORE ELECTRONIC | MOLSON COORS vs. AOI Electronics Co | MOLSON COORS vs. Methode Electronics | 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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