Correlation Between Monster Beverage and Ion Beam
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Ion Beam 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 Monster Beverage and Ion Beam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monster Beverage Corp and Ion Beam Applications, you can compare the effects of market volatilities on Monster Beverage and Ion Beam 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 Monster Beverage with a short position of Ion Beam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Ion Beam.
Diversification Opportunities for Monster Beverage and Ion Beam
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Monster and Ion is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Ion Beam Applications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ion Beam Applications and Monster Beverage 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 Monster Beverage Corp are associated (or correlated) with Ion Beam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ion Beam Applications has no effect on the direction of Monster Beverage i.e., Monster Beverage and Ion Beam go up and down completely randomly.
Pair Corralation between Monster Beverage and Ion Beam
Assuming the 90 days trading horizon Monster Beverage Corp is expected to under-perform the Ion Beam. But the stock apears to be less risky and, when comparing its historical volatility, Monster Beverage Corp is 1.3 times less risky than Ion Beam. The stock trades about -0.18 of its potential returns per unit of risk. The Ion Beam Applications is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,275 in Ion Beam Applications on September 14, 2024 and sell it today you would earn a total of 64.00 from holding Ion Beam Applications or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Ion Beam Applications
Performance |
| Timeline |
| Monster Beverage Corp |
| Ion Beam Applications |
Monster Beverage and Ion Beam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Ion Beam
The main advantage of trading using opposite Monster Beverage and Ion Beam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Ion Beam 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 Ion Beam will offset losses from the drop in Ion Beam's long position.| Monster Beverage vs. Inspiration Healthcare Group | Monster Beverage vs. Omega Healthcare Investors | Monster Beverage vs. Naturhouse Health SA | Monster Beverage vs. Optima Health plc |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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