Correlation Between Molson Coors and Northland Power
Can any of the company-specific risk be diversified away by investing in both Molson Coors and Northland 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 Northland 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 Northland Power, you can compare the effects of market volatilities on Molson Coors and Northland 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 Northland Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and Northland Power.
Diversification Opportunities for Molson Coors and Northland Power
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Molson and Northland is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Canada and Northland Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northland Power 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 Northland Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northland Power has no effect on the direction of Molson Coors i.e., Molson Coors and Northland Power go up and down completely randomly.
Pair Corralation between Molson Coors and Northland Power
Assuming the 90 days trading horizon Molson Coors Canada is expected to generate 1.11 times more return on investment than Northland Power. However, Molson Coors is 1.11 times more volatile than Northland Power. It trades about -0.07 of its potential returns per unit of risk. Northland Power is currently generating about -0.14 per unit of risk. If you would invest 8,214 in Molson Coors Canada on November 3, 2024 and sell it today you would lose (256.00) from holding Molson Coors Canada or give up 3.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 81.82% |
| Values | Daily Returns |
Molson Coors Canada vs. Northland Power
Performance |
| Timeline |
| Molson Coors Canada |
| Northland Power |
Molson Coors and Northland Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molson Coors and Northland Power
The main advantage of trading using opposite Molson Coors and Northland Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, Northland 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 Northland Power will offset losses from the drop in Northland Power's long position.| Molson Coors vs. Maple Leaf Foods | Molson Coors vs. Saputo Inc | Molson Coors vs. Quebecor | Molson Coors vs. Lassonde Industries |
| Northland Power vs. Brookfield Renewable Partners | Northland Power vs. Algonquin Power Utilities | Northland Power vs. Innergex Renewable Energy | Northland Power vs. Capital Power |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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