Correlation Between Monster Beverage and BP PLC
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and BP PLC 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 BP PLC 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 BP PLC ADR, you can compare the effects of market volatilities on Monster Beverage and BP PLC 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 BP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and BP PLC.
Diversification Opportunities for Monster Beverage and BP PLC
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Monster and 0HKP is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and BP PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP PLC ADR 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 BP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP PLC ADR has no effect on the direction of Monster Beverage i.e., Monster Beverage and BP PLC go up and down completely randomly.
Pair Corralation between Monster Beverage and BP PLC
Assuming the 90 days trading horizon Monster Beverage is expected to generate 1.36 times less return on investment than BP PLC. In addition to that, Monster Beverage is 1.3 times more volatile than BP PLC ADR. It trades about 0.02 of its total potential returns per unit of risk. BP PLC ADR is currently generating about 0.04 per unit of volatility. If you would invest 2,927 in BP PLC ADR on September 5, 2024 and sell it today you would earn a total of 31.00 from holding BP PLC ADR or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Monster Beverage Corp vs. BP PLC ADR
Performance |
| Timeline |
| Monster Beverage Corp |
| BP PLC ADR |
Monster Beverage and BP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and BP PLC
The main advantage of trading using opposite Monster Beverage and BP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, BP PLC 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 BP PLC will offset losses from the drop in BP PLC's long position.| Monster Beverage vs. Samsung Electronics Co | Monster Beverage vs. Samsung Electronics Co | Monster Beverage vs. Hyundai Motor | Monster Beverage vs. Toyota Motor Corp |
| BP PLC vs. Datalogic | BP PLC vs. Molson Coors Beverage | BP PLC vs. Tatton Asset Management | BP PLC vs. Monster Beverage Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |