Correlation Between Molson Coors and Safety Insurance
Can any of the company-specific risk be diversified away by investing in both Molson Coors and Safety Insurance 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 Safety Insurance 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 Safety Insurance Group, you can compare the effects of market volatilities on Molson Coors and Safety Insurance 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 Safety Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and Safety Insurance.
Diversification Opportunities for Molson Coors and Safety Insurance
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Molson and Safety is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and Safety Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Insurance 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 Safety Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Insurance has no effect on the direction of Molson Coors i.e., Molson Coors and Safety Insurance go up and down completely randomly.
Pair Corralation between Molson Coors and Safety Insurance
Assuming the 90 days trading horizon Molson Coors is expected to generate 1.02 times less return on investment than Safety Insurance. In addition to that, Molson Coors is 1.32 times more volatile than Safety Insurance Group. It trades about 0.25 of its total potential returns per unit of risk. Safety Insurance Group is currently generating about 0.34 per unit of volatility. If you would invest 7,050 in Safety Insurance Group on September 3, 2024 and sell it today you would earn a total of 950.00 from holding Safety Insurance Group or generate 13.48% 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. Safety Insurance Group
Performance |
| Timeline |
| Molson Coors Beverage |
| Safety Insurance |
Molson Coors and Safety Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molson Coors and Safety Insurance
The main advantage of trading using opposite Molson Coors and Safety Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, Safety Insurance 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 Safety Insurance will offset losses from the drop in Safety Insurance's long position.The idea behind Molson Coors Beverage and Safety Insurance Group 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.| Safety Insurance vs. Sims Metal Management | Safety Insurance vs. Flutter Entertainment PLC | Safety Insurance vs. TOWNSQUARE MEDIA INC | Safety Insurance vs. RCS MediaGroup SpA |
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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