Correlation Between Molson Coors and BRP
Can any of the company-specific risk be diversified away by investing in both Molson Coors and BRP 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 BRP 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 BRP Inc, you can compare the effects of market volatilities on Molson Coors and BRP 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 BRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and BRP.
Diversification Opportunities for Molson Coors and BRP
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Molson and BRP is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Canada and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc 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 BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of Molson Coors i.e., Molson Coors and BRP go up and down completely randomly.
Pair Corralation between Molson Coors and BRP
Assuming the 90 days trading horizon Molson Coors Canada is expected to generate 0.8 times more return on investment than BRP. However, Molson Coors Canada is 1.24 times less risky than BRP. It trades about 0.07 of its potential returns per unit of risk. BRP Inc is currently generating about -0.08 per unit of risk. If you would invest 7,331 in Molson Coors Canada on November 28, 2024 and sell it today you would earn a total of 1,369 from holding Molson Coors Canada or generate 18.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 76.09% |
| Values | Daily Returns |
Molson Coors Canada vs. BRP Inc
Performance |
| Timeline |
| Molson Coors Canada |
| BRP Inc |
Molson Coors and BRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molson Coors and BRP
The main advantage of trading using opposite Molson Coors and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, BRP 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 BRP will offset losses from the drop in BRP's long position.| Molson Coors vs. Maple Leaf Foods | Molson Coors vs. Saputo Inc | Molson Coors vs. Quebecor | Molson Coors vs. Lassonde Industries |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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