Correlation Between Scandinavian Tobacco and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco 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 Scandinavian Tobacco and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandinavian Tobacco Group and Monster Beverage Corp, you can compare the effects of market volatilities on Scandinavian Tobacco 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 Scandinavian Tobacco with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Monster Beverage.
Diversification Opportunities for Scandinavian Tobacco and Monster Beverage
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Scandinavian and Monster is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group 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 Scandinavian Tobacco 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 Scandinavian Tobacco Group 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 Scandinavian Tobacco i.e., Scandinavian Tobacco and Monster Beverage go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Monster Beverage
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to generate 0.57 times more return on investment than Monster Beverage. However, Scandinavian Tobacco Group is 1.74 times less risky than Monster Beverage. It trades about 0.11 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about -0.18 per unit of risk. If you would invest 9,545 in Scandinavian Tobacco Group on September 14, 2024 and sell it today you would earn a total of 210.00 from holding Scandinavian Tobacco Group or generate 2.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Monster Beverage Corp
Performance |
| Timeline |
| Scandinavian Tobacco |
| Monster Beverage Corp |
Scandinavian Tobacco and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Monster Beverage
The main advantage of trading using opposite Scandinavian Tobacco and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco 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.| Scandinavian Tobacco vs. Aurora Investment Trust | Scandinavian Tobacco vs. Blackrock World Mining | Scandinavian Tobacco vs. FC Investment Trust | Scandinavian Tobacco vs. METALL ZUG AG |
| Monster Beverage vs. Inspiration Healthcare Group | Monster Beverage vs. Omega Healthcare Investors | Monster Beverage vs. Naturhouse Health SA | Monster Beverage vs. Optima Health plc |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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