Correlation Between Molson Coors and J+J SNACK
Can any of the company-specific risk be diversified away by investing in both Molson Coors and J+J SNACK 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 J+J SNACK 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 JJ SNACK FOODS, you can compare the effects of market volatilities on Molson Coors and J+J SNACK 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 J+J SNACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and J+J SNACK.
Diversification Opportunities for Molson Coors and J+J SNACK
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Molson and J+J is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and JJ SNACK FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJ SNACK FOODS 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 J+J SNACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJ SNACK FOODS has no effect on the direction of Molson Coors i.e., Molson Coors and J+J SNACK go up and down completely randomly.
Pair Corralation between Molson Coors and J+J SNACK
Assuming the 90 days trading horizon Molson Coors Beverage is expected to generate 1.9 times more return on investment than J+J SNACK. However, Molson Coors is 1.9 times more volatile than JJ SNACK FOODS. It trades about 0.22 of its potential returns per unit of risk. JJ SNACK FOODS is currently generating about 0.14 per unit of risk. If you would invest 4,906 in Molson Coors Beverage on September 13, 2024 and sell it today you would earn a total of 896.00 from holding Molson Coors Beverage or generate 18.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Molson Coors Beverage vs. JJ SNACK FOODS
Performance |
| Timeline |
| Molson Coors Beverage |
| JJ SNACK FOODS |
Molson Coors and J+J SNACK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molson Coors and J+J SNACK
The main advantage of trading using opposite Molson Coors and J+J SNACK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, J+J SNACK 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 J+J SNACK will offset losses from the drop in J+J SNACK's long position.The idea behind Molson Coors Beverage and JJ SNACK FOODS 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.| J+J SNACK vs. Hormel Foods | J+J SNACK vs. Superior Plus Corp | J+J SNACK vs. SIVERS SEMICONDUCTORS AB | J+J SNACK vs. NorAm Drilling AS |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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