Correlation Between S A P and Molson Coors
Can any of the company-specific risk be diversified away by investing in both S A P and Molson Coors 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 S A P and Molson Coors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saputo Inc and Molson Coors Canada, you can compare the effects of market volatilities on S A P and Molson Coors 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 S A P with a short position of Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Molson Coors.
Diversification Opportunities for S A P and Molson Coors
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SAP and Molson is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Saputo Inc and Molson Coors Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Canada and S A P 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 Saputo Inc are associated (or correlated) with Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Canada has no effect on the direction of S A P i.e., S A P and Molson Coors go up and down completely randomly.
Pair Corralation between S A P and Molson Coors
Assuming the 90 days trading horizon Saputo Inc is expected to under-perform the Molson Coors. But the stock apears to be less risky and, when comparing its historical volatility, Saputo Inc is 1.64 times less risky than Molson Coors. The stock trades about -0.21 of its potential returns per unit of risk. The Molson Coors Canada is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 7,732 in Molson Coors Canada on August 31, 2024 and sell it today you would earn a total of 968.00 from holding Molson Coors Canada or generate 12.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 85.48% |
| Values | Daily Returns |
Saputo Inc vs. Molson Coors Canada
Performance |
| Timeline |
| Saputo Inc |
| Molson Coors Canada |
S A P and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and Molson Coors
The main advantage of trading using opposite S A P and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P position performs unexpectedly, Molson Coors 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 Molson Coors will offset losses from the drop in Molson Coors' long position.| S A P vs. Metro Inc | S A P vs. George Weston Limited | S A P vs. Gildan Activewear | S A P vs. Loblaw Companies Limited |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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