Correlation Between Take Two and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Take Two 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 Take Two and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Take Two Interactive Software and Monster Beverage Corp, you can compare the effects of market volatilities on Take Two 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 Take Two with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Monster Beverage.
Diversification Opportunities for Take Two and Monster Beverage
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Take and Monster is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software 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 Take Two 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 Take Two Interactive Software 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 Take Two i.e., Take Two and Monster Beverage go up and down completely randomly.
Pair Corralation between Take Two and Monster Beverage
Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 2.06 times more return on investment than Monster Beverage. However, Take Two is 2.06 times more volatile than Monster Beverage Corp. It trades about 0.15 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.14 per unit of risk. If you would invest 18,898 in Take Two Interactive Software on November 28, 2024 and sell it today you would earn a total of 1,971 from holding Take Two Interactive Software or generate 10.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Take Two Interactive Software vs. Monster Beverage Corp
Performance |
| Timeline |
| Take Two Interactive |
| Monster Beverage Corp |
Take Two and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and Monster Beverage
The main advantage of trading using opposite Take Two and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two 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.| Take Two vs. Omega Healthcare Investors | Take Two vs. First Class Metals | Take Two vs. Central Asia Metals | Take Two vs. Silvercorp Metals |
| Monster Beverage vs. Pets at Home | Monster Beverage vs. Tata Steel Limited | Monster Beverage vs. Clean Power Hydrogen | Monster Beverage vs. Iron Mountain |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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