Correlation Between Universal Insurance and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Universal Insurance 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 Universal Insurance and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Insurance Holdings and Monster Beverage Corp, you can compare the effects of market volatilities on Universal Insurance 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 Universal Insurance with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and Monster Beverage.
Diversification Opportunities for Universal Insurance and Monster Beverage
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and Monster is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings 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 Universal Insurance 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 Universal Insurance Holdings 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 Universal Insurance i.e., Universal Insurance and Monster Beverage go up and down completely randomly.
Pair Corralation between Universal Insurance and Monster Beverage
Assuming the 90 days horizon Universal Insurance Holdings is expected to under-perform the Monster Beverage. But the stock apears to be less risky and, when comparing its historical volatility, Universal Insurance Holdings is 1.05 times less risky than Monster Beverage. The stock trades about -0.4 of its potential returns per unit of risk. The Monster Beverage Corp is currently generating about -0.28 of returns per unit of risk over similar time horizon. If you would invest 5,274 in Monster Beverage Corp on September 26, 2024 and sell it today you would lose (318.00) from holding Monster Beverage Corp or give up 6.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Insurance Holdings vs. Monster Beverage Corp
Performance |
| Timeline |
| Universal Insurance |
| Monster Beverage Corp |
Universal Insurance and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and Monster Beverage
The main advantage of trading using opposite Universal Insurance and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance 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.| Universal Insurance vs. Transportadora de Gas | Universal Insurance vs. SPORT LISBOA E | Universal Insurance vs. Transport International Holdings | Universal Insurance vs. Columbia Sportswear |
| Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Microsoft | Monster Beverage vs. Microsoft |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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