Correlation Between Molson Coors and AVITA Medical
Can any of the company-specific risk be diversified away by investing in both Molson Coors and AVITA Medical 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 AVITA Medical 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 AVITA Medical, you can compare the effects of market volatilities on Molson Coors and AVITA Medical 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 AVITA Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and AVITA Medical.
Diversification Opportunities for Molson Coors and AVITA Medical
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Molson and AVITA is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and AVITA Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVITA Medical 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 AVITA Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVITA Medical has no effect on the direction of Molson Coors i.e., Molson Coors and AVITA Medical go up and down completely randomly.
Pair Corralation between Molson Coors and AVITA Medical
Assuming the 90 days trading horizon Molson Coors Beverage is expected to generate 0.34 times more return on investment than AVITA Medical. However, Molson Coors Beverage is 2.92 times less risky than AVITA Medical. It trades about 0.03 of its potential returns per unit of risk. AVITA Medical is currently generating about 0.0 per unit of risk. If you would invest 4,901 in Molson Coors Beverage on October 26, 2024 and sell it today you would earn a total of 263.00 from holding Molson Coors Beverage or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Molson Coors Beverage vs. AVITA Medical
Performance |
| Timeline |
| Molson Coors Beverage |
| AVITA Medical |
Molson Coors and AVITA Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molson Coors and AVITA Medical
The main advantage of trading using opposite Molson Coors and AVITA Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, AVITA Medical 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 AVITA Medical will offset losses from the drop in AVITA Medical's long position.The idea behind Molson Coors Beverage and AVITA Medical 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.| AVITA Medical vs. Benchmark Electronics | AVITA Medical vs. STMicroelectronics NV | AVITA Medical vs. Samsung Electronics Co | AVITA Medical vs. Molson Coors Beverage |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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