Correlation Between Molson Coors and Westrock Coffee

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

Diversification Opportunities for Molson Coors and Westrock Coffee

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Molson and Westrock is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Brewing and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee 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 Brewing are associated (or correlated) with Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of Molson Coors i.e., Molson Coors and Westrock Coffee go up and down completely randomly.

Pair Corralation between Molson Coors and Westrock Coffee

Considering the 90-day investment horizon Molson Coors is expected to generate 1.53 times less return on investment than Westrock Coffee. But when comparing it to its historical volatility, Molson Coors Brewing is 2.25 times less risky than Westrock Coffee. It trades about 0.4 of its potential returns per unit of risk. Westrock Coffee is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  664.00  in Westrock Coffee on September 1, 2024 and sell it today you would earn a total of  139.00  from holding Westrock Coffee or generate 20.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Molson Coors Brewing  vs.  Westrock Coffee

 Performance 
       Timeline  
Molson Coors Brewing 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Brewing are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Westrock Coffee 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Westrock Coffee are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Westrock Coffee may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Molson Coors and Westrock Coffee Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Molson Coors and Westrock Coffee

The main advantage of trading using opposite Molson Coors and Westrock Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, Westrock Coffee 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 Westrock Coffee will offset losses from the drop in Westrock Coffee's long position.
The idea behind Molson Coors Brewing and Westrock Coffee 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.
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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