Correlation Between Monster Beverage and Eagle Eye
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Eagle Eye 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 Eagle Eye 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 Eagle Eye Solutions, you can compare the effects of market volatilities on Monster Beverage and Eagle Eye 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 Eagle Eye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Eagle Eye.
Diversification Opportunities for Monster Beverage and Eagle Eye
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and Eagle is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Eagle Eye Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Eye Solutions 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 Eagle Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Eye Solutions has no effect on the direction of Monster Beverage i.e., Monster Beverage and Eagle Eye go up and down completely randomly.
Pair Corralation between Monster Beverage and Eagle Eye
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 0.24 times more return on investment than Eagle Eye. However, Monster Beverage Corp is 4.25 times less risky than Eagle Eye. It trades about -0.22 of its potential returns per unit of risk. Eagle Eye Solutions is currently generating about -0.18 per unit of risk. If you would invest 5,245 in Monster Beverage Corp on November 3, 2024 and sell it today you would lose (326.00) from holding Monster Beverage Corp or give up 6.22% 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. Eagle Eye Solutions
Performance |
| Timeline |
| Monster Beverage Corp |
| Eagle Eye Solutions |
Monster Beverage and Eagle Eye Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Eagle Eye
The main advantage of trading using opposite Monster Beverage and Eagle Eye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Eagle Eye 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 Eagle Eye will offset losses from the drop in Eagle Eye's long position.| Monster Beverage vs. Allianz Technology Trust | Monster Beverage vs. Check Point Software | Monster Beverage vs. Europa Metals | Monster Beverage vs. Gruppo MutuiOnline SpA |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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