Correlation Between IMPERIAL TOBACCO and Molson Coors
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO 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 IMPERIAL TOBACCO and Molson Coors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and Molson Coors Beverage, you can compare the effects of market volatilities on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO with a short position of Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Molson Coors.
Diversification Opportunities for IMPERIAL TOBACCO and Molson Coors
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IMPERIAL and Molson is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Molson Coors go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and Molson Coors
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.78 times more return on investment than Molson Coors. However, IMPERIAL TOBACCO is 1.28 times less risky than Molson Coors. It trades about 0.07 of its potential returns per unit of risk. Molson Coors Beverage is currently generating about 0.02 per unit of risk. If you would invest 2,109 in IMPERIAL TOBACCO on October 16, 2024 and sell it today you would earn a total of 950.00 from holding IMPERIAL TOBACCO or generate 45.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. Molson Coors Beverage
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| Molson Coors Beverage |
IMPERIAL TOBACCO and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and Molson Coors
The main advantage of trading using opposite IMPERIAL TOBACCO and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO 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.| IMPERIAL TOBACCO vs. Shenandoah Telecommunications | IMPERIAL TOBACCO vs. ecotel communication ag | IMPERIAL TOBACCO vs. COMBA TELECOM SYST | IMPERIAL TOBACCO vs. NORTHEAST UTILITIES |
| Molson Coors vs. Shenandoah Telecommunications | Molson Coors vs. Cairo Communication SpA | Molson Coors vs. Monument Mining Limited | Molson Coors vs. IMPERIAL TOBACCO |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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