Correlation Between Molson Coors and Activision Blizzard

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

Diversification Opportunities for Molson Coors and Activision Blizzard

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Molson and Activision is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Brewing and Activision Blizzard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Activision Blizzard 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 Brewing are associated (or correlated) with Activision Blizzard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Activision Blizzard has no effect on the direction of Molson Coors i.e., Molson Coors and Activision Blizzard go up and down completely randomly.

Pair Corralation between Molson Coors and Activision Blizzard

If you would invest  6,245  in Molson Coors Brewing on December 30, 2023 and sell it today you would earn a total of  480.00  from holding Molson Coors Brewing or generate 7.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy4.55%
ValuesDaily Returns

Molson Coors Brewing  vs.  Activision Blizzard

 Performance 
       Timeline  
Molson Coors Brewing 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Brewing are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Activision Blizzard 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Activision Blizzard has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Activision Blizzard is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Molson Coors and Activision Blizzard Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Molson Coors and Activision Blizzard

The main advantage of trading using opposite Molson Coors and Activision Blizzard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, Activision Blizzard 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 Activision Blizzard will offset losses from the drop in Activision Blizzard's long position.
The idea behind Molson Coors Brewing and Activision Blizzard 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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