Correlation Between Monster Beverage and Associated British
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Associated British 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 Associated British 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 Associated British Foods, you can compare the effects of market volatilities on Monster Beverage and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Associated British.
Diversification Opportunities for Monster Beverage and Associated British
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Monster and Associated is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Monster Beverage i.e., Monster Beverage and Associated British go up and down completely randomly.
Pair Corralation between Monster Beverage and Associated British
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 1.11 times more return on investment than Associated British. However, Monster Beverage is 1.11 times more volatile than Associated British Foods. It trades about -0.17 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.26 per unit of risk. If you would invest 5,490 in Monster Beverage Corp on November 7, 2024 and sell it today you would lose (807.00) from holding Monster Beverage Corp or give up 14.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.39% |
| Values | Daily Returns |
Monster Beverage Corp vs. Associated British Foods
Performance |
| Timeline |
| Monster Beverage Corp |
| Associated British Foods |
Monster Beverage and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Associated British
The main advantage of trading using opposite Monster Beverage and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Monster Beverage vs. AMG Advanced Metallurgical | Monster Beverage vs. United Internet AG | Monster Beverage vs. Alfa Financial Software | Monster Beverage vs. United Utilities Group |
| Associated British vs. Coeur Mining | Associated British vs. Fevertree Drinks Plc | Associated British vs. Pan American Silver | Associated British vs. Beowulf Mining |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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