Correlation Between Volkswagen and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Volkswagen 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 Volkswagen and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Monster Beverage Corp, you can compare the effects of market volatilities on Volkswagen 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 Volkswagen with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Monster Beverage.
Diversification Opportunities for Volkswagen and Monster Beverage
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Volkswagen and Monster is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG 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 Volkswagen 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 Volkswagen AG 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 Volkswagen i.e., Volkswagen and Monster Beverage go up and down completely randomly.
Pair Corralation between Volkswagen and Monster Beverage
Assuming the 90 days trading horizon Volkswagen AG is expected to under-perform the Monster Beverage. In addition to that, Volkswagen is 1.25 times more volatile than Monster Beverage Corp. It trades about -0.17 of its total potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.15 per unit of volatility. If you would invest 4,822 in Monster Beverage Corp on September 3, 2024 and sell it today you would earn a total of 715.00 from holding Monster Beverage Corp or generate 14.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG vs. Monster Beverage Corp
Performance |
| Timeline |
| Volkswagen AG |
| Monster Beverage Corp |
Volkswagen and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Monster Beverage
The main advantage of trading using opposite Volkswagen and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen 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.| Volkswagen vs. Monster Beverage Corp | Volkswagen vs. Young Cos Brewery | Volkswagen vs. Ecclesiastical Insurance Office | Volkswagen vs. Fortune Brands Home |
| Monster Beverage vs. Catalyst Media Group | Monster Beverage vs. CATLIN GROUP | Monster Beverage vs. Tamburi Investment Partners | Monster Beverage vs. Magnora ASA |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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