Correlation Between Air Transport and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Air Transport 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 Air Transport and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Transport Services and Monster Beverage Corp, you can compare the effects of market volatilities on Air Transport 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 Air Transport with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Monster Beverage.
Diversification Opportunities for Air Transport and Monster Beverage
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Monster is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services 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 Air Transport 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 Air Transport Services 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 Air Transport i.e., Air Transport and Monster Beverage go up and down completely randomly.
Pair Corralation between Air Transport and Monster Beverage
Given the investment horizon of 90 days Air Transport Services is expected to generate 2.18 times more return on investment than Monster Beverage. However, Air Transport is 2.18 times more volatile than Monster Beverage Corp. It trades about 0.12 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.03 per unit of risk. If you would invest 1,340 in Air Transport Services on August 25, 2024 and sell it today you would earn a total of 856.00 from holding Air Transport Services or generate 63.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. Monster Beverage Corp
Performance |
| Timeline |
| Air Transport Services |
| Monster Beverage Corp |
Air Transport and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and Monster Beverage
The main advantage of trading using opposite Air Transport and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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.| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group Holdings |
| Monster Beverage vs. Vita Coco | Monster Beverage vs. PepsiCo | Monster Beverage vs. The Coca Cola | Monster Beverage vs. Coca Cola Femsa SAB |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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