Correlation Between Monster Beverage and HCA Healthcare
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and HCA Healthcare 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 HCA Healthcare 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 HCA Healthcare, you can compare the effects of market volatilities on Monster Beverage and HCA Healthcare 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 HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and HCA Healthcare.
Diversification Opportunities for Monster Beverage and HCA Healthcare
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Monster and HCA is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare 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 HCA Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Healthcare has no effect on the direction of Monster Beverage i.e., Monster Beverage and HCA Healthcare go up and down completely randomly.
Pair Corralation between Monster Beverage and HCA Healthcare
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 1.66 times more return on investment than HCA Healthcare. However, Monster Beverage is 1.66 times more volatile than HCA Healthcare. It trades about -0.18 of its potential returns per unit of risk. HCA Healthcare is currently generating about -0.46 per unit of risk. If you would invest 5,639 in Monster Beverage Corp on September 13, 2024 and sell it today you would lose (388.00) from holding Monster Beverage Corp or give up 6.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. HCA Healthcare
Performance |
| Timeline |
| Monster Beverage Corp |
| HCA Healthcare |
Monster Beverage and HCA Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and HCA Healthcare
The main advantage of trading using opposite Monster Beverage and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, HCA Healthcare 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 HCA Healthcare will offset losses from the drop in HCA Healthcare's long position.| Monster Beverage vs. Samsung Electronics Co | Monster Beverage vs. Samsung Electronics Co | Monster Beverage vs. Hyundai Motor | Monster Beverage vs. Reliance Industries Ltd |
| HCA Healthcare vs. International Consolidated Airlines | HCA Healthcare vs. United Airlines Holdings | HCA Healthcare vs. Monster Beverage Corp | HCA Healthcare vs. Teradata 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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