Correlation Between JD Sports and Molson Coors
Can any of the company-specific risk be diversified away by investing in both JD Sports 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 JD Sports and Molson Coors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD Sports Fashion and Molson Coors Brewing, you can compare the effects of market volatilities on JD Sports 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 JD Sports with a short position of Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Molson Coors.
Diversification Opportunities for JD Sports and Molson Coors
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between JDDSF and Molson is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Molson Coors Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Brewing and JD Sports 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 JD Sports Fashion 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 Brewing has no effect on the direction of JD Sports i.e., JD Sports and Molson Coors go up and down completely randomly.
Pair Corralation between JD Sports and Molson Coors
Assuming the 90 days horizon JD Sports is expected to generate 1.61 times less return on investment than Molson Coors. In addition to that, JD Sports is 1.71 times more volatile than Molson Coors Brewing. It trades about 0.03 of its total potential returns per unit of risk. Molson Coors Brewing is currently generating about 0.08 per unit of volatility. If you would invest 5,391 in Molson Coors Brewing on August 29, 2024 and sell it today you would earn a total of 750.00 from holding Molson Coors Brewing or generate 13.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Molson Coors Brewing
Performance |
| Timeline |
| JD Sports Fashion |
| Molson Coors Brewing |
JD Sports and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Molson Coors
The main advantage of trading using opposite JD Sports and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports 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 JD Sports Fashion and Molson Coors Brewing 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. Budweiser Brewing | Molson Coors vs. Boston Beer | Molson Coors vs. Anheuser Busch InBev SANV | Molson Coors vs. Ambev SA ADR |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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