Correlation Between Monster Beverage and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Scandinavian Tobacco 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 Scandinavian Tobacco 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 Scandinavian Tobacco Group, you can compare the effects of market volatilities on Monster Beverage and Scandinavian Tobacco 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 Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Scandinavian Tobacco.
Diversification Opportunities for Monster Beverage and Scandinavian Tobacco
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Monster and Scandinavian is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco 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 Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of Monster Beverage i.e., Monster Beverage and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Monster Beverage and Scandinavian Tobacco
Assuming the 90 days trading horizon Monster Beverage Corp is expected to under-perform the Scandinavian Tobacco. In addition to that, Monster Beverage is 1.74 times more volatile than Scandinavian Tobacco Group. It trades about -0.18 of its total potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.11 per unit of volatility. If you would invest 9,545 in Scandinavian Tobacco Group on September 14, 2024 and sell it today you would earn a total of 210.00 from holding Scandinavian Tobacco Group or generate 2.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Monster Beverage Corp |
| Scandinavian Tobacco |
Monster Beverage and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Scandinavian Tobacco
The main advantage of trading using opposite Monster Beverage and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco'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 |
| Scandinavian Tobacco vs. Aurora Investment Trust | Scandinavian Tobacco vs. Blackrock World Mining | Scandinavian Tobacco vs. FC Investment Trust | Scandinavian Tobacco vs. METALL ZUG AG |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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