Correlation Between MOLSON COORS and H2O Retailing

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Can any of the company-specific risk be diversified away by investing in both MOLSON COORS and H2O Retailing 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 H2O Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MOLSON RS BEVERAGE and H2O Retailing, you can compare the effects of market volatilities on MOLSON COORS and H2O Retailing 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 H2O Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOLSON COORS and H2O Retailing.

Diversification Opportunities for MOLSON COORS and H2O Retailing

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between MOLSON and H2O is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding MOLSON RS BEVERAGE and H2O Retailing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H2O Retailing 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 RS BEVERAGE are associated (or correlated) with H2O Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H2O Retailing has no effect on the direction of MOLSON COORS i.e., MOLSON COORS and H2O Retailing go up and down completely randomly.

Pair Corralation between MOLSON COORS and H2O Retailing

Assuming the 90 days trading horizon MOLSON COORS is expected to generate 1.74 times less return on investment than H2O Retailing. In addition to that, MOLSON COORS is 1.46 times more volatile than H2O Retailing. It trades about 0.03 of its total potential returns per unit of risk. H2O Retailing is currently generating about 0.08 per unit of volatility. If you would invest  1,400  in H2O Retailing on November 3, 2024 and sell it today you would earn a total of  30.00  from holding H2O Retailing or generate 2.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

MOLSON RS BEVERAGE  vs.  H2O Retailing

 Performance 
       Timeline  
MOLSON RS BEVERAGE 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in MOLSON RS BEVERAGE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MOLSON COORS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
H2O Retailing 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in H2O Retailing are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, H2O Retailing reported solid returns over the last few months and may actually be approaching a breakup point.

MOLSON COORS and H2O Retailing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MOLSON COORS and H2O Retailing

The main advantage of trading using opposite MOLSON COORS and H2O Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOLSON COORS position performs unexpectedly, H2O Retailing 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 H2O Retailing will offset losses from the drop in H2O Retailing's long position.
The idea behind MOLSON RS BEVERAGE and H2O Retailing 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.
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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