Correlation Between Monster Beverage and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Cognizant Technology 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 Cognizant Technology 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 Cognizant Technology Solutions, you can compare the effects of market volatilities on Monster Beverage and Cognizant Technology 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 Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Cognizant Technology.
Diversification Opportunities for Monster Beverage and Cognizant Technology
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Monster and Cognizant is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology 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 Cognizant Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognizant Technology has no effect on the direction of Monster Beverage i.e., Monster Beverage and Cognizant Technology go up and down completely randomly.
Pair Corralation between Monster Beverage and Cognizant Technology
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 0.72 times more return on investment than Cognizant Technology. However, Monster Beverage Corp is 1.39 times less risky than Cognizant Technology. It trades about -0.21 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about -0.29 per unit of risk. If you would invest 5,320 in Monster Beverage Corp on October 11, 2024 and sell it today you would lose (178.00) from holding Monster Beverage Corp or give up 3.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Monster Beverage Corp |
| Cognizant Technology |
Monster Beverage and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Cognizant Technology
The main advantage of trading using opposite Monster Beverage and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Cognizant Technology 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 Cognizant Technology will offset losses from the drop in Cognizant Technology's long position.| Monster Beverage vs. BlackRock Frontiers Investment | Monster Beverage vs. Jupiter Green Investment | Monster Beverage vs. Cairo Communication SpA | Monster Beverage vs. Chrysalis Investments |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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