Correlation Between Molson Coors and United Utilities
Can any of the company-specific risk be diversified away by investing in both Molson Coors and United Utilities 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 Utilities 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 Utilities Group, you can compare the effects of market volatilities on Molson Coors and United Utilities 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 Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and United Utilities.
Diversification Opportunities for Molson Coors and United Utilities
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Molson and United is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Beverage and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities 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 Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of Molson Coors i.e., Molson Coors and United Utilities go up and down completely randomly.
Pair Corralation between Molson Coors and United Utilities
Assuming the 90 days trading horizon Molson Coors Beverage is expected to generate 0.61 times more return on investment than United Utilities. However, Molson Coors Beverage is 1.63 times less risky than United Utilities. It trades about -0.39 of its potential returns per unit of risk. United Utilities Group is currently generating about -0.33 per unit of risk. If you would invest 5,784 in Molson Coors Beverage on October 14, 2024 and sell it today you would lose (444.00) from holding Molson Coors Beverage or give up 7.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Molson Coors Beverage vs. United Utilities Group
Performance |
| Timeline |
| Molson Coors Beverage |
| United Utilities |
Molson Coors and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molson Coors and United Utilities
The main advantage of trading using opposite Molson Coors and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, United Utilities 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 Utilities will offset losses from the drop in United Utilities' long position.| Molson Coors vs. NTT DATA | Molson Coors vs. YOOMA WELLNESS INC | Molson Coors vs. PURETECH HEALTH PLC | Molson Coors vs. HEALTHSTREAM |
| United Utilities vs. Dentsply Sirona | United Utilities vs. TOMBADOR IRON LTD | United Utilities vs. STEEL DYNAMICS | United Utilities vs. DENTSPLY SIRONA |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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