Correlation Between Monster Beverage and Sabre Insurance
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Sabre Insurance 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 Sabre Insurance 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 Sabre Insurance Group, you can compare the effects of market volatilities on Monster Beverage and Sabre Insurance 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 Sabre Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Sabre Insurance.
Diversification Opportunities for Monster Beverage and Sabre Insurance
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Monster and Sabre is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Sabre Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Insurance Group 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 Sabre Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Insurance Group has no effect on the direction of Monster Beverage i.e., Monster Beverage and Sabre Insurance go up and down completely randomly.
Pair Corralation between Monster Beverage and Sabre Insurance
Assuming the 90 days trading horizon Monster Beverage Corp is expected to under-perform the Sabre Insurance. In addition to that, Monster Beverage is 1.45 times more volatile than Sabre Insurance Group. It trades about -0.03 of its total potential returns per unit of risk. Sabre Insurance Group is currently generating about 0.05 per unit of volatility. If you would invest 9,699 in Sabre Insurance Group on September 14, 2024 and sell it today you would earn a total of 3,981 from holding Sabre Insurance Group or generate 41.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Monster Beverage Corp vs. Sabre Insurance Group
Performance |
| Timeline |
| Monster Beverage Corp |
| Sabre Insurance Group |
Monster Beverage and Sabre Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Sabre Insurance
The main advantage of trading using opposite Monster Beverage and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Sabre Insurance 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 Sabre Insurance will offset losses from the drop in Sabre Insurance's long position.| Monster Beverage vs. Inspiration Healthcare Group | Monster Beverage vs. Omega Healthcare Investors | Monster Beverage vs. Naturhouse Health SA | Monster Beverage vs. Optima Health plc |
| Sabre Insurance vs. SupplyMe Capital PLC | Sabre Insurance vs. Lloyds Banking Group | Sabre Insurance vs. Premier African Minerals | Sabre Insurance vs. SANTANDER UK 8 |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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