Correlation Between United Internet and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both United Internet and Monster Beverage 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 United Internet and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Internet AG and Monster Beverage Corp, you can compare the effects of market volatilities on United Internet and Monster Beverage 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 United Internet with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and Monster Beverage.
Diversification Opportunities for United Internet and Monster Beverage
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Monster is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and Monster Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage Corp and United Internet 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 United Internet AG are associated (or correlated) with Monster Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monster Beverage Corp has no effect on the direction of United Internet i.e., United Internet and Monster Beverage go up and down completely randomly.
Pair Corralation between United Internet and Monster Beverage
Assuming the 90 days trading horizon United Internet AG is expected to generate 0.64 times more return on investment than Monster Beverage. However, United Internet AG is 1.56 times less risky than Monster Beverage. It trades about 0.03 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about -0.17 per unit of risk. If you would invest 1,603 in United Internet AG on September 13, 2024 and sell it today you would earn a total of 8.00 from holding United Internet AG or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Internet AG vs. Monster Beverage Corp
Performance |
| Timeline |
| United Internet AG |
| Monster Beverage Corp |
United Internet and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Internet and Monster Beverage
The main advantage of trading using opposite United Internet and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet position performs unexpectedly, Monster Beverage 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 Monster Beverage will offset losses from the drop in Monster Beverage's long position.| United Internet vs. Tyson Foods Cl | United Internet vs. Virgin Wines UK | United Internet vs. Ebro Foods | United Internet vs. Vienna Insurance Group |
| Monster Beverage vs. Inspiration Healthcare Group | Monster Beverage vs. Omega Healthcare Investors | Monster Beverage vs. Naturhouse Health SA | Monster Beverage vs. Optima Health plc |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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