Correlation Between Universal and Molson Coors
Can any of the company-specific risk be diversified away by investing in both Universal and Molson Coors 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 Universal and Molson Coors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal and Molson Coors Brewing, you can compare the effects of market volatilities on Universal and Molson Coors 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 Universal with a short position of Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal and Molson Coors.
Diversification Opportunities for Universal and Molson Coors
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and Molson is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Universal and Molson Coors Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Brewing and Universal 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 Universal are associated (or correlated) with Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Brewing has no effect on the direction of Universal i.e., Universal and Molson Coors go up and down completely randomly.
Pair Corralation between Universal and Molson Coors
Considering the 90-day investment horizon Universal is expected to generate 1.04 times less return on investment than Molson Coors. But when comparing it to its historical volatility, Universal is 1.01 times less risky than Molson Coors. It trades about 0.09 of its potential returns per unit of risk. Molson Coors Brewing is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,690 in Molson Coors Brewing on August 31, 2024 and sell it today you would earn a total of 435.00 from holding Molson Coors Brewing or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal vs. Molson Coors Brewing
Performance |
| Timeline |
| Universal |
| Molson Coors Brewing |
Universal and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal and Molson Coors
The main advantage of trading using opposite Universal and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal position performs unexpectedly, Molson Coors 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 Molson Coors will offset losses from the drop in Molson Coors' long position.| Universal vs. Imperial Brands PLC | Universal vs. Japan Tobacco ADR | Universal vs. Philip Morris International | Universal vs. Turning Point Brands |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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