Correlation Between National Beverage and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both National Beverage and Monster Beverage 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 National Beverage and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and Monster Beverage Corp, you can compare the effects of market volatilities on National Beverage and Monster Beverage 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 National Beverage with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Monster Beverage.
Diversification Opportunities for National Beverage and Monster Beverage
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and Monster is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Monster Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage Corp and National 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 National Beverage Corp are associated (or correlated) with Monster Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monster Beverage Corp has no effect on the direction of National Beverage i.e., National Beverage and Monster Beverage go up and down completely randomly.
Pair Corralation between National Beverage and Monster Beverage
Assuming the 90 days trading horizon National Beverage Corp is expected to under-perform the Monster Beverage. In addition to that, National Beverage is 1.07 times more volatile than Monster Beverage Corp. It trades about -0.04 of its total potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.03 per unit of volatility. If you would invest 4,822 in Monster Beverage Corp on November 2, 2024 and sell it today you would earn a total of 133.00 from holding Monster Beverage Corp or generate 2.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Monster Beverage Corp
Performance |
| Timeline |
| National Beverage Corp |
| Monster Beverage Corp |
National Beverage and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Monster Beverage
The main advantage of trading using opposite National Beverage and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Monster Beverage 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 Monster Beverage will offset losses from the drop in Monster Beverage's long position.| National Beverage vs. LBG Media PLC | National Beverage vs. Catalyst Media Group | National Beverage vs. Liberty Media Corp | National Beverage vs. Canadian General Investments |
| Monster Beverage vs. Jacquet Metal Service | Monster Beverage vs. Empire Metals Limited | Monster Beverage vs. Fortuna Silver Mines | Monster Beverage vs. Pan American Silver |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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