Correlation Between Monster Beverage and InterContinental
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and InterContinental 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 InterContinental 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 InterContinental Hotels Group, you can compare the effects of market volatilities on Monster Beverage and InterContinental 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 InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and InterContinental.
Diversification Opportunities for Monster Beverage and InterContinental
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and InterContinental is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels 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 InterContinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterContinental Hotels has no effect on the direction of Monster Beverage i.e., Monster Beverage and InterContinental go up and down completely randomly.
Pair Corralation between Monster Beverage and InterContinental
Assuming the 90 days trading horizon Monster Beverage Corp is expected to under-perform the InterContinental. In addition to that, Monster Beverage is 1.17 times more volatile than InterContinental Hotels Group. It trades about -0.01 of its total potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.14 per unit of volatility. If you would invest 525,051 in InterContinental Hotels Group on September 12, 2024 and sell it today you would earn a total of 450,749 from holding InterContinental Hotels Group or generate 85.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.95% |
| Values | Daily Returns |
Monster Beverage Corp vs. InterContinental Hotels Group
Performance |
| Timeline |
| Monster Beverage Corp |
| InterContinental Hotels |
Monster Beverage and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and InterContinental
The main advantage of trading using opposite Monster Beverage and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, InterContinental 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 InterContinental will offset losses from the drop in InterContinental's long position.| Monster Beverage vs. Hong Kong Land | Monster Beverage vs. Neometals | Monster Beverage vs. Coor Service Management | Monster Beverage vs. Fidelity Sustainable USD |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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