Correlation Between Simulations Plus and Molson Coors

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

0.46

Correlation Coefficient

Simulations Plus  Molson Coors

Very weak diversification

The 3 months correlation between Simulations and Molson is 0.46. 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

If you would invest  4,106  in Simulations Plus on January 26, 2024 and sell it today you would earn a total of  559.00  from holding Simulations Plus or generate 13.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Simulations Plus  vs.  Molson Coors Beverage

Simulations Plus

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Simulations Plus are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating essential indicators, Simulations Plus reported solid returns over the last few months and may actually be approaching a breakup point.

Molson Coors Beverage

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in May 2024.

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.

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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.