Correlation Between Molson Coors and VP Bank
Can any of the company-specific risk be diversified away by investing in both Molson Coors and VP Bank 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 Molson Coors and VP Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Molson Coors Beverage and VP Bank AG, you can compare the effects of market volatilities on Molson Coors and VP Bank 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 Molson Coors with a short position of VP Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and VP Bank.
Diversification Opportunities for Molson Coors and VP Bank
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Molson and 3VFN is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and VP Bank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VP Bank AG and Molson Coors 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 Molson Coors Beverage are associated (or correlated) with VP Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VP Bank AG has no effect on the direction of Molson Coors i.e., Molson Coors and VP Bank go up and down completely randomly.
Pair Corralation between Molson Coors and VP Bank
Assuming the 90 days trading horizon Molson Coors Beverage is expected to generate 0.93 times more return on investment than VP Bank. However, Molson Coors Beverage is 1.07 times less risky than VP Bank. It trades about 0.04 of its potential returns per unit of risk. VP Bank AG is currently generating about 0.01 per unit of risk. If you would invest 4,517 in Molson Coors Beverage on September 13, 2024 and sell it today you would earn a total of 1,321 from holding Molson Coors Beverage or generate 29.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Molson Coors Beverage vs. VP Bank AG
Performance |
| Timeline |
| Molson Coors Beverage |
| VP Bank AG |
Molson Coors and VP Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molson Coors and VP Bank
The main advantage of trading using opposite Molson Coors and VP Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, VP Bank 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 VP Bank will offset losses from the drop in VP Bank's long position.The idea behind Molson Coors Beverage and VP Bank AG 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.| VP Bank vs. Molson Coors Beverage | VP Bank vs. SCANSOURCE | VP Bank vs. Jacquet Metal Service | VP Bank vs. MCEWEN MINING INC |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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