Correlation Between Molson Coors and UNITED RENTALS
Can any of the company-specific risk be diversified away by investing in both Molson Coors and UNITED RENTALS 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 UNITED RENTALS 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 UNITED RENTALS, you can compare the effects of market volatilities on Molson Coors and UNITED RENTALS 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 UNITED RENTALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and UNITED RENTALS.
Diversification Opportunities for Molson Coors and UNITED RENTALS
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Molson and UNITED is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and UNITED RENTALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED RENTALS 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 UNITED RENTALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED RENTALS has no effect on the direction of Molson Coors i.e., Molson Coors and UNITED RENTALS go up and down completely randomly.
Pair Corralation between Molson Coors and UNITED RENTALS
Assuming the 90 days trading horizon Molson Coors Beverage is expected to under-perform the UNITED RENTALS. But the stock apears to be less risky and, when comparing its historical volatility, Molson Coors Beverage is 1.66 times less risky than UNITED RENTALS. The stock trades about -0.2 of its potential returns per unit of risk. The UNITED RENTALS is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 65,340 in UNITED RENTALS on November 8, 2024 and sell it today you would earn a total of 5,420 from holding UNITED RENTALS or generate 8.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Molson Coors Beverage vs. UNITED RENTALS
Performance |
| Timeline |
| Molson Coors Beverage |
| UNITED RENTALS |
Molson Coors and UNITED RENTALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molson Coors and UNITED RENTALS
The main advantage of trading using opposite Molson Coors and UNITED RENTALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, UNITED RENTALS 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 UNITED RENTALS will offset losses from the drop in UNITED RENTALS's long position.| Molson Coors vs. Take Two Interactive Software | Molson Coors vs. Columbia Sportswear | Molson Coors vs. Wayside Technology Group | Molson Coors vs. InPlay Oil Corp |
| UNITED RENTALS vs. The Trade Desk | UNITED RENTALS vs. MEDCAW INVESTMENTS LS 01 | UNITED RENTALS vs. SEI INVESTMENTS | UNITED RENTALS vs. Gladstone Investment |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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