Correlation Between Baxter International and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Baxter International 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 Baxter International and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baxter International and Monster Beverage Corp, you can compare the effects of market volatilities on Baxter International 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 Baxter International with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baxter International and Monster Beverage.
Diversification Opportunities for Baxter International and Monster Beverage
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baxter and Monster is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Baxter International 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 Baxter International 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 Baxter International 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 Baxter International i.e., Baxter International and Monster Beverage go up and down completely randomly.
Pair Corralation between Baxter International and Monster Beverage
Assuming the 90 days trading horizon Baxter International is expected to under-perform the Monster Beverage. In addition to that, Baxter International is 1.61 times more volatile than Monster Beverage Corp. It trades about -0.06 of its total potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.02 per unit of volatility. If you would invest 99,850 in Monster Beverage Corp on September 4, 2024 and sell it today you would earn a total of 13,650 from holding Monster Beverage Corp or generate 13.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baxter International vs. Monster Beverage Corp
Performance |
| Timeline |
| Baxter International |
| Monster Beverage Corp |
Baxter International and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baxter International and Monster Beverage
The main advantage of trading using opposite Baxter International and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baxter International 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.| Baxter International vs. Monster Beverage Corp | Baxter International vs. Capital One Financial | Baxter International vs. McEwen Mining | Baxter International vs. Samsung Electronics Co |
| Monster Beverage vs. The Select Sector | Monster Beverage vs. Promotora y Operadora | Monster Beverage vs. SPDR Series Trust | Monster Beverage vs. Vanguard World |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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