Correlation Between Molson Coors and Acuity Brands

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Can any of the company-specific risk be diversified away by investing in both Molson Coors and Acuity Brands 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 Acuity Brands 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 Acuity Brands, you can compare the effects of market volatilities on Molson Coors and Acuity Brands 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 Acuity Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and Acuity Brands.

Diversification Opportunities for Molson Coors and Acuity Brands

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Molson and Acuity is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Brewing and Acuity Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acuity Brands 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 Acuity Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acuity Brands has no effect on the direction of Molson Coors i.e., Molson Coors and Acuity Brands go up and down completely randomly.

Pair Corralation between Molson Coors and Acuity Brands

Considering the 90-day investment horizon Molson Coors Brewing is expected to under-perform the Acuity Brands. But the stock apears to be less risky and, when comparing its historical volatility, Molson Coors Brewing is 1.35 times less risky than Acuity Brands. The stock trades about -0.09 of its potential returns per unit of risk. The Acuity Brands is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  25,854  in Acuity Brands on January 15, 2024 and sell it today you would lose (96.00) from holding Acuity Brands or give up 0.37% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Molson Coors Brewing  vs.  Acuity Brands

 Performance 
       Timeline  
Molson Coors Brewing 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Brewing are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Molson Coors is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.
Acuity Brands 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Acuity Brands are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Acuity Brands demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Molson Coors and Acuity Brands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Molson Coors and Acuity Brands

The main advantage of trading using opposite Molson Coors and Acuity Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, Acuity Brands 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 Acuity Brands will offset losses from the drop in Acuity Brands' long position.
The idea behind Molson Coors Brewing and Acuity Brands 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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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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