Correlation Between Molson Coors and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both Molson Coors and Ecopetrol 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 Ecopetrol 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 Ecopetrol SA, you can compare the effects of market volatilities on Molson Coors and Ecopetrol 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 Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and Ecopetrol.
Diversification Opportunities for Molson Coors and Ecopetrol
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Molson and Ecopetrol is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and Ecopetrol SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopetrol SA 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 Ecopetrol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecopetrol SA has no effect on the direction of Molson Coors i.e., Molson Coors and Ecopetrol go up and down completely randomly.
Pair Corralation between Molson Coors and Ecopetrol
Assuming the 90 days trading horizon Molson Coors Beverage is expected to generate 1.07 times more return on investment than Ecopetrol. However, Molson Coors is 1.07 times more volatile than Ecopetrol SA. It trades about 0.24 of its potential returns per unit of risk. Ecopetrol SA is currently generating about 0.01 per unit of risk. If you would invest 5,156 in Molson Coors Beverage on August 29, 2024 and sell it today you would earn a total of 680.00 from holding Molson Coors Beverage or generate 13.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Molson Coors Beverage vs. Ecopetrol SA
Performance |
| Timeline |
| Molson Coors Beverage |
| Ecopetrol SA |
Molson Coors and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molson Coors and Ecopetrol
The main advantage of trading using opposite Molson Coors and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, Ecopetrol 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 Ecopetrol will offset losses from the drop in Ecopetrol's long position.| Molson Coors vs. Universal Display | Molson Coors vs. Gamma Communications plc | Molson Coors vs. MI Homes | Molson Coors vs. CENTURIA OFFICE REIT |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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