Correlation Between Simulations Plus and Molson Coors

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Can any of the company-specific risk be diversified away by investing in both Simulations Plus 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 Simulations Plus and Molson Coors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simulations Plus and Molson Coors Beverage, you can compare the effects of market volatilities on Simulations Plus 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 Simulations Plus with a short position of Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simulations Plus and Molson Coors.

Diversification Opportunities for Simulations Plus and Molson Coors

-0.44
  Correlation Coefficient

Very good diversification

The 3 months correlation between Simulations and Molson is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Simulations Plus and Molson Coors Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Beverage and Simulations Plus 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 Simulations Plus 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 Beverage has no effect on the direction of Simulations Plus i.e., Simulations Plus and Molson Coors go up and down completely randomly.

Pair Corralation between Simulations Plus and Molson Coors

Considering the 90-day investment horizon Simulations Plus is expected to under-perform the Molson Coors. But the stock apears to be less risky and, when comparing its historical volatility, Simulations Plus is 1.04 times less risky than Molson Coors. The stock trades about -0.03 of its potential returns per unit of risk. The Molson Coors Beverage is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5,304  in Molson Coors Beverage on November 4, 2022 and sell it today you would earn a total of  1,246  from holding Molson Coors Beverage or generate 23.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.8%
ValuesDaily Returns

Simulations Plus  vs.  Molson Coors Beverage

 Performance (%) 
       Timeline  
Simulations Plus 
Simulations Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Simulations Plus are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady essential indicators, Simulations Plus displayed solid returns over the last few months and may actually be approaching a breakup point.

Simulations Price Channel

Molson Coors Beverage 
Molson Performance
0 of 100
Over the last 90 days Molson Coors Beverage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Molson Coors is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Molson Price Channel

Simulations Plus and Molson Coors Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Simulations Plus and Molson Coors

The main advantage of trading using opposite Simulations Plus and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simulations Plus 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.
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The idea behind Simulations Plus and Molson Coors Beverage pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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