Correlation Between Monster Beverage and JD Sports
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and JD Sports 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 JD Sports 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 JD Sports Fashion, you can compare the effects of market volatilities on Monster Beverage and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and JD Sports.
Diversification Opportunities for Monster Beverage and JD Sports
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Monster and JD Sports is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Monster Beverage i.e., Monster Beverage and JD Sports go up and down completely randomly.
Pair Corralation between Monster Beverage and JD Sports
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 0.28 times more return on investment than JD Sports. However, Monster Beverage Corp is 3.57 times less risky than JD Sports. It trades about -0.26 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.19 per unit of risk. If you would invest 5,172 in Monster Beverage Corp on October 23, 2024 and sell it today you would lose (218.00) from holding Monster Beverage Corp or give up 4.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Monster Beverage Corp vs. JD Sports Fashion
Performance |
| Timeline |
| Monster Beverage Corp |
| JD Sports Fashion |
Monster Beverage and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and JD Sports
The main advantage of trading using opposite Monster Beverage and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| Monster Beverage vs. Home Depot | Monster Beverage vs. Weiss Korea Opportunity | Monster Beverage vs. River and Mercantile | Monster Beverage vs. Chrysalis Investments |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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