Correlation Between Constellation Brands and Molson Coors
Can any of the company-specific risk be diversified away by investing in both Constellation Brands 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 Constellation Brands and Molson Coors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellation Brands Class and Molson Coors Brewing, you can compare the effects of market volatilities on Constellation Brands 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 Constellation Brands with a short position of Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Molson Coors.
Diversification Opportunities for Constellation Brands and Molson Coors
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Constellation and Molson is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class 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 Constellation Brands 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 Constellation Brands Class 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 Constellation Brands i.e., Constellation Brands and Molson Coors go up and down completely randomly.
Pair Corralation between Constellation Brands and Molson Coors
Considering the 90-day investment horizon Constellation Brands Class is expected to generate 0.92 times more return on investment than Molson Coors. However, Constellation Brands Class is 1.09 times less risky than Molson Coors. It trades about -0.17 of its potential returns per unit of risk. Molson Coors Brewing is currently generating about -0.24 per unit of risk. If you would invest 27,044 in Constellation Brands Class on January 25, 2024 and sell it today you would lose (960.50) from holding Constellation Brands Class or give up 3.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Brands Class vs. Molson Coors Brewing
Performance |
| Timeline |
| Constellation Brands |
| Molson Coors Brewing |
Constellation Brands and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and Molson Coors
The main advantage of trading using opposite Constellation Brands and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands 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.| Constellation Brands vs. Andrew Peller Limited | Constellation Brands vs. Naked Wines plc | Constellation Brands vs. Willamette Valley Vineyards | Constellation Brands vs. The Tinley Beverage |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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