Correlation Between Monster Beverage and Lundin Mining
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Lundin Mining 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 Lundin Mining 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 Lundin Mining Corp, you can compare the effects of market volatilities on Monster Beverage and Lundin Mining 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 Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Lundin Mining.
Diversification Opportunities for Monster Beverage and Lundin Mining
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and Lundin is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Lundin Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining 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 Lundin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Mining Corp has no effect on the direction of Monster Beverage i.e., Monster Beverage and Lundin Mining go up and down completely randomly.
Pair Corralation between Monster Beverage and Lundin Mining
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 0.62 times more return on investment than Lundin Mining. However, Monster Beverage Corp is 1.61 times less risky than Lundin Mining. It trades about -0.24 of its potential returns per unit of risk. Lundin Mining Corp is currently generating about -0.15 per unit of risk. If you would invest 5,261 in Monster Beverage Corp on November 4, 2024 and sell it today you would lose (342.00) from holding Monster Beverage Corp or give up 6.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Lundin Mining Corp
Performance |
| Timeline |
| Monster Beverage Corp |
| Lundin Mining Corp |
Monster Beverage and Lundin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Lundin Mining
The main advantage of trading using opposite Monster Beverage and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Lundin Mining 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 Lundin Mining will offset losses from the drop in Lundin Mining's long position.| Monster Beverage vs. Foresight Environmental Infrastructure | Monster Beverage vs. Gaztransport et Technigaz | Monster Beverage vs. Evolution Gaming Group | Monster Beverage vs. STMicroelectronics NV |
| Lundin Mining vs. Cornish Metals | Lundin Mining vs. GoldMining | Lundin Mining vs. Eastinco Mining Exploration | Lundin Mining vs. BW Offshore |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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