Correlation Between Monster Beverage and Litigation Capital
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Litigation Capital 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 Litigation Capital 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 Litigation Capital Management, you can compare the effects of market volatilities on Monster Beverage and Litigation Capital 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 Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Litigation Capital.
Diversification Opportunities for Monster Beverage and Litigation Capital
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and Litigation is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital 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 Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of Monster Beverage i.e., Monster Beverage and Litigation Capital go up and down completely randomly.
Pair Corralation between Monster Beverage and Litigation Capital
Assuming the 90 days trading horizon Monster Beverage is expected to generate 2.35 times less return on investment than Litigation Capital. But when comparing it to its historical volatility, Monster Beverage Corp is 1.29 times less risky than Litigation Capital. It trades about 0.02 of its potential returns per unit of risk. Litigation Capital Management is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9,727 in Litigation Capital Management on August 29, 2024 and sell it today you would earn a total of 1,848 from holding Litigation Capital Management or generate 19.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.99% |
| Values | Daily Returns |
Monster Beverage Corp vs. Litigation Capital Management
Performance |
| Timeline |
| Monster Beverage Corp |
| Litigation Capital |
Monster Beverage and Litigation Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Litigation Capital
The main advantage of trading using opposite Monster Beverage and Litigation Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Litigation Capital 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 Litigation Capital will offset losses from the drop in Litigation Capital's long position.| Monster Beverage vs. Lendinvest PLC | Monster Beverage vs. Neometals | Monster Beverage vs. Coor Service Management | Monster Beverage vs. Albion Technology General |
| Litigation Capital vs. Toyota Motor Corp | Litigation Capital vs. Lendinvest PLC | Litigation Capital vs. Neometals | Litigation Capital vs. Coor Service Management |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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