Correlation Between Molson Coors and Canlan Ice
Can any of the company-specific risk be diversified away by investing in both Molson Coors and Canlan Ice 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 Canlan Ice 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 Canlan Ice Sports, you can compare the effects of market volatilities on Molson Coors and Canlan Ice 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 Canlan Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and Canlan Ice.
Diversification Opportunities for Molson Coors and Canlan Ice
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Molson and Canlan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Canada and Canlan Ice Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canlan Ice Sports 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 Canlan Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canlan Ice Sports has no effect on the direction of Molson Coors i.e., Molson Coors and Canlan Ice go up and down completely randomly.
Pair Corralation between Molson Coors and Canlan Ice
Assuming the 90 days trading horizon Molson Coors Canada is expected to generate 1.02 times more return on investment than Canlan Ice. However, Molson Coors is 1.02 times more volatile than Canlan Ice Sports. It trades about 0.11 of its potential returns per unit of risk. Canlan Ice Sports is currently generating about 0.06 per unit of risk. If you would invest 7,331 in Molson Coors Canada on September 1, 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 | Significant |
| Accuracy | 78.57% |
| Values | Daily Returns |
Molson Coors Canada vs. Canlan Ice Sports
Performance |
| Timeline |
| Molson Coors Canada |
| Canlan Ice Sports |
Molson Coors and Canlan Ice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molson Coors and Canlan Ice
The main advantage of trading using opposite Molson Coors and Canlan Ice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, Canlan Ice 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 Canlan Ice will offset losses from the drop in Canlan Ice's long position.| Molson Coors vs. Maple Leaf Foods | Molson Coors vs. Saputo Inc | Molson Coors vs. Quebecor | Molson Coors vs. Lassonde Industries |
| Canlan Ice vs. BMTC Group | Canlan Ice vs. Caldwell Partners International | Canlan Ice vs. TWC Enterprises | Canlan Ice vs. Foraco International SA |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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