Correlation Between Molson Coors and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both Molson Coors and Algonquin Power 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 Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Molson Coors Canada and Algonquin Power Utilities, you can compare the effects of market volatilities on Molson Coors and Algonquin Power 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 Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and Algonquin Power.
Diversification Opportunities for Molson Coors and Algonquin Power
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Molson and Algonquin is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Canada and Algonquin Power Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algonquin Power 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 Canada are associated (or correlated) with Algonquin Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algonquin Power Utilities has no effect on the direction of Molson Coors i.e., Molson Coors and Algonquin Power go up and down completely randomly.
Pair Corralation between Molson Coors and Algonquin Power
Assuming the 90 days trading horizon Molson Coors Canada is expected to generate 0.96 times more return on investment than Algonquin Power. However, Molson Coors Canada is 1.04 times less risky than Algonquin Power. It trades about 0.02 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about -0.02 per unit of risk. If you would invest 8,314 in Molson Coors Canada on September 2, 2024 and sell it today you would earn a total of 386.00 from holding Molson Coors Canada or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 75.4% |
| Values | Daily Returns |
Molson Coors Canada vs. Algonquin Power Utilities
Performance |
| Timeline |
| Molson Coors Canada |
| Algonquin Power Utilities |
Molson Coors and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molson Coors and Algonquin Power
The main advantage of trading using opposite Molson Coors and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, Algonquin Power 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 Algonquin Power will offset losses from the drop in Algonquin Power's long position.| Molson Coors vs. Maple Leaf Foods | Molson Coors vs. Saputo Inc | Molson Coors vs. Quebecor | Molson Coors vs. Lassonde Industries |
| Algonquin Power vs. Fortis Inc | Algonquin Power vs. Enbridge | Algonquin Power vs. Telus Corp | Algonquin Power vs. Brookfield Renewable Partners |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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