Correlation Between Freddie Mac and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Freddie Mac 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 Freddie Mac and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freddie Mac and Monster Beverage Corp, you can compare the effects of market volatilities on Freddie Mac 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 Freddie Mac with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freddie Mac and Monster Beverage.
Diversification Opportunities for Freddie Mac and Monster Beverage
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Freddie and Monster is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Freddie Mac 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 Freddie Mac 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 Freddie Mac 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 Freddie Mac i.e., Freddie Mac and Monster Beverage go up and down completely randomly.
Pair Corralation between Freddie Mac and Monster Beverage
Assuming the 90 days trading horizon Freddie Mac is expected to generate 8.74 times more return on investment than Monster Beverage. However, Freddie Mac is 8.74 times more volatile than Monster Beverage Corp. It trades about 0.25 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about -0.21 per unit of risk. If you would invest 338.00 in Freddie Mac on November 2, 2024 and sell it today you would earn a total of 193.00 from holding Freddie Mac or generate 57.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freddie Mac vs. Monster Beverage Corp
Performance |
| Timeline |
| Freddie Mac |
| Monster Beverage Corp |
Freddie Mac and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freddie Mac and Monster Beverage
The main advantage of trading using opposite Freddie Mac and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freddie Mac 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.| Freddie Mac vs. Metro Bank PLC | Freddie Mac vs. Zoom Video Communications | Freddie Mac vs. Geely Automobile Holdings | Freddie Mac vs. Sydbank |
| Monster Beverage vs. Jacquet Metal Service | Monster Beverage vs. Empire Metals Limited | Monster Beverage vs. Fortuna Silver Mines | Monster Beverage vs. Pan American Silver |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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