Correlation Between Molson Coors and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Molson Coors and Norsk Hydro 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 Norsk Hydro 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 Norsk Hydro ASA, you can compare the effects of market volatilities on Molson Coors and Norsk Hydro 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 Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and Norsk Hydro.
Diversification Opportunities for Molson Coors and Norsk Hydro
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Molson and Norsk is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and Norsk Hydro ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norsk Hydro ASA 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 Norsk Hydro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norsk Hydro ASA has no effect on the direction of Molson Coors i.e., Molson Coors and Norsk Hydro go up and down completely randomly.
Pair Corralation between Molson Coors and Norsk Hydro
Assuming the 90 days trading horizon Molson Coors is expected to generate 7.57 times less return on investment than Norsk Hydro. But when comparing it to its historical volatility, Molson Coors Beverage is 2.89 times less risky than Norsk Hydro. It trades about 0.02 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 356.00 in Norsk Hydro ASA on September 19, 2024 and sell it today you would earn a total of 193.00 from holding Norsk Hydro ASA or generate 54.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Molson Coors Beverage vs. Norsk Hydro ASA
Performance |
| Timeline |
| Molson Coors Beverage |
| Norsk Hydro ASA |
Molson Coors and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molson Coors and Norsk Hydro
The main advantage of trading using opposite Molson Coors and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, Norsk Hydro 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 Norsk Hydro will offset losses from the drop in Norsk Hydro's long position.The idea behind Molson Coors Beverage and Norsk Hydro ASA 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.| Norsk Hydro vs. T MOBILE US | Norsk Hydro vs. PT Ace Hardware | Norsk Hydro vs. Align Technology | Norsk Hydro vs. SMA Solar Technology |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |