Correlation Between Coca Cola and Molson Coors
Can any of the company-specific risk be diversified away by investing in both Coca Cola 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 Coca Cola and Molson Coors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Coca Cola and Molson Coors Brewing, you can compare the effects of market volatilities on Coca Cola 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 Coca Cola with a short position of Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Molson Coors.
Diversification Opportunities for Coca Cola and Molson Coors
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coca and Molson is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola 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 Coca Cola 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 The Coca Cola 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 Coca Cola i.e., Coca Cola and Molson Coors go up and down completely randomly.
Pair Corralation between Coca Cola and Molson Coors
Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Molson Coors. But the stock apears to be less risky and, when comparing its historical volatility, The Coca Cola is 1.78 times less risky than Molson Coors. The stock trades about -0.17 of its potential returns per unit of risk. The Molson Coors Brewing is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 5,601 in Molson Coors Brewing on August 28, 2024 and sell it today you would earn a total of 466.00 from holding Molson Coors Brewing or generate 8.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Molson Coors Brewing
Performance |
| Timeline |
| Coca Cola |
| Molson Coors Brewing |
Coca Cola and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Molson Coors
The main advantage of trading using opposite Coca Cola and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola 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.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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