Correlation Between Monster Beverage and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Fresenius Medical 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 Fresenius Medical 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 Fresenius Medical Care, you can compare the effects of market volatilities on Monster Beverage and Fresenius Medical 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 Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Fresenius Medical.
Diversification Opportunities for Monster Beverage and Fresenius Medical
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Monster and Fresenius is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Fresenius Medical Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius Medical Care 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 Fresenius Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius Medical Care has no effect on the direction of Monster Beverage i.e., Monster Beverage and Fresenius Medical go up and down completely randomly.
Pair Corralation between Monster Beverage and Fresenius Medical
Assuming the 90 days trading horizon Monster Beverage Corp is expected to under-perform the Fresenius Medical. In addition to that, Monster Beverage is 1.29 times more volatile than Fresenius Medical Care. It trades about -0.03 of its total potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.06 per unit of volatility. If you would invest 2,812 in Fresenius Medical Care on September 14, 2024 and sell it today you would earn a total of 1,733 from holding Fresenius Medical Care or generate 61.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Monster Beverage Corp vs. Fresenius Medical Care
Performance |
| Timeline |
| Monster Beverage Corp |
| Fresenius Medical Care |
Monster Beverage and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Fresenius Medical
The main advantage of trading using opposite Monster Beverage and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Fresenius Medical 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 Fresenius Medical will offset losses from the drop in Fresenius Medical'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 |
| Fresenius Medical vs. Monster Beverage Corp | Fresenius Medical vs. MoneysupermarketCom Group PLC | Fresenius Medical vs. Albion Technology General | Fresenius Medical vs. Ocean Harvest Technology |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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