Correlation Between MOLSON RS and SOLSTAD OFFSHORE
Can any of the company-specific risk be diversified away by investing in both MOLSON RS and SOLSTAD OFFSHORE 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 RS and SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE NK, you can compare the effects of market volatilities on MOLSON RS and SOLSTAD OFFSHORE 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 RS with a short position of SOLSTAD OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOLSON RS and SOLSTAD OFFSHORE.
Diversification Opportunities for MOLSON RS and SOLSTAD OFFSHORE
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MOLSON and SOLSTAD is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding MOLSON RS BEVERAGE and SOLSTAD OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOLSTAD OFFSHORE and MOLSON RS 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 SOLSTAD OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOLSTAD OFFSHORE has no effect on the direction of MOLSON RS i.e., MOLSON RS and SOLSTAD OFFSHORE go up and down completely randomly.
Pair Corralation between MOLSON RS and SOLSTAD OFFSHORE
Assuming the 90 days trading horizon MOLSON RS is expected to generate 3.63 times less return on investment than SOLSTAD OFFSHORE. But when comparing it to its historical volatility, MOLSON RS BEVERAGE is 4.7 times less risky than SOLSTAD OFFSHORE. It trades about 0.39 of its potential returns per unit of risk. SOLSTAD OFFSHORE NK is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 254.00 in SOLSTAD OFFSHORE NK on August 29, 2024 and sell it today you would earn a total of 91.00 from holding SOLSTAD OFFSHORE NK or generate 35.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
MOLSON RS BEVERAGE vs. SOLSTAD OFFSHORE NK
Performance |
| Timeline |
| MOLSON RS BEVERAGE |
| SOLSTAD OFFSHORE |
MOLSON RS and SOLSTAD OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MOLSON RS and SOLSTAD OFFSHORE
The main advantage of trading using opposite MOLSON RS and SOLSTAD OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOLSON RS position performs unexpectedly, SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE will offset losses from the drop in SOLSTAD OFFSHORE's long position.| MOLSON RS vs. China Resources Beer | MOLSON RS vs. Molson Coors Brewing | MOLSON RS vs. Superior Plus Corp | MOLSON RS vs. SIVERS SEMICONDUCTORS AB |
| SOLSTAD OFFSHORE vs. ZIM Integrated Shipping | SOLSTAD OFFSHORE vs. Superior Plus Corp | SOLSTAD OFFSHORE vs. NMI Holdings | SOLSTAD OFFSHORE vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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