Correlation Between Monster Beverage and Sage Group
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Sage Group 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 Sage Group 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 Sage Group PLC, you can compare the effects of market volatilities on Monster Beverage and Sage Group 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 Sage Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Sage Group.
Diversification Opportunities for Monster Beverage and Sage Group
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Monster and Sage is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Sage Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sage Group PLC 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 Sage Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sage Group PLC has no effect on the direction of Monster Beverage i.e., Monster Beverage and Sage Group go up and down completely randomly.
Pair Corralation between Monster Beverage and Sage Group
Assuming the 90 days trading horizon Monster Beverage Corp is expected to under-perform the Sage Group. But the stock apears to be less risky and, when comparing its historical volatility, Monster Beverage Corp is 1.17 times less risky than Sage Group. The stock trades about -0.02 of its potential returns per unit of risk. The Sage Group PLC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 107,528 in Sage Group PLC on October 26, 2024 and sell it today you would earn a total of 26,122 from holding Sage Group PLC or generate 24.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.43% |
Values | Daily Returns |
Monster Beverage Corp vs. Sage Group PLC
Performance |
Timeline |
Monster Beverage Corp |
Sage Group PLC |
Monster Beverage and Sage Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Monster Beverage and Sage Group
The main advantage of trading using opposite Monster Beverage and Sage Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Sage Group 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 Sage Group will offset losses from the drop in Sage Group's long position.Monster Beverage vs. Axway Software SA | Monster Beverage vs. Wheaton Precious Metals | Monster Beverage vs. Vitec Software Group | Monster Beverage vs. Bisichi Mining PLC |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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