Correlation Between Monster Beverage and MT Bank
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and MT Bank 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 MT Bank 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 MT Bank Corp, you can compare the effects of market volatilities on Monster Beverage and MT Bank 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 MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and MT Bank.
Diversification Opportunities for Monster Beverage and MT Bank
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Monster and 0JW2 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and MT Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank Corp 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 MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank Corp has no effect on the direction of Monster Beverage i.e., Monster Beverage and MT Bank go up and down completely randomly.
Pair Corralation between Monster Beverage and MT Bank
Assuming the 90 days trading horizon Monster Beverage Corp is expected to under-perform the MT Bank. But the stock apears to be less risky and, when comparing its historical volatility, Monster Beverage Corp is 1.87 times less risky than MT Bank. The stock trades about -0.52 of its potential returns per unit of risk. The MT Bank Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 18,956 in MT Bank Corp on October 26, 2024 and sell it today you would earn a total of 806.00 from holding MT Bank Corp or generate 4.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
Monster Beverage Corp vs. MT Bank Corp
Performance |
| Timeline |
| Monster Beverage Corp |
| MT Bank Corp |
Monster Beverage and MT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and MT Bank
The main advantage of trading using opposite Monster Beverage and MT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, MT Bank 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 MT Bank will offset losses from the drop in MT Bank's long position.| Monster Beverage vs. Axway Software SA | Monster Beverage vs. Wheaton Precious Metals | Monster Beverage vs. Vitec Software Group | Monster Beverage vs. Bisichi Mining PLC |
| MT Bank vs. Jacquet Metal Service | MT Bank vs. Monster Beverage Corp | MT Bank vs. Eastinco Mining Exploration | MT Bank vs. Cornish Metals |
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 CEOs Directory module to screen CEOs from public companies around the world.
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