Correlation Between AUST AGRICULTURAL and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both AUST AGRICULTURAL 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 AUST AGRICULTURAL and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AUST AGRICULTURAL and Monster Beverage Corp, you can compare the effects of market volatilities on AUST AGRICULTURAL 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 AUST AGRICULTURAL with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUST AGRICULTURAL and Monster Beverage.
Diversification Opportunities for AUST AGRICULTURAL and Monster Beverage
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between AUST and Monster is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding AUST AGRICULTURAL 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 AUST AGRICULTURAL 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 AUST AGRICULTURAL 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 AUST AGRICULTURAL i.e., AUST AGRICULTURAL and Monster Beverage go up and down completely randomly.
Pair Corralation between AUST AGRICULTURAL and Monster Beverage
Assuming the 90 days trading horizon AUST AGRICULTURAL is expected to under-perform the Monster Beverage. But the stock apears to be less risky and, when comparing its historical volatility, AUST AGRICULTURAL is 1.52 times less risky than Monster Beverage. The stock trades about -0.09 of its potential returns per unit of risk. The Monster Beverage Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,703 in Monster Beverage Corp on August 28, 2024 and sell it today you would earn a total of 571.00 from holding Monster Beverage Corp or generate 12.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AUST AGRICULTURAL vs. Monster Beverage Corp
Performance |
| Timeline |
| AUST AGRICULTURAL |
| Monster Beverage Corp |
AUST AGRICULTURAL and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AUST AGRICULTURAL and Monster Beverage
The main advantage of trading using opposite AUST AGRICULTURAL and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUST AGRICULTURAL 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.| AUST AGRICULTURAL vs. KB HOME | AUST AGRICULTURAL vs. TOREX SEMICONDUCTOR LTD | AUST AGRICULTURAL vs. Beazer Homes USA | AUST AGRICULTURAL vs. Nordic Semiconductor ASA |
| Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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