Correlation Between Biogen and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Biogen 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 Biogen and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biogen Inc and Monster Beverage Corp, you can compare the effects of market volatilities on Biogen 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 Biogen with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biogen and Monster Beverage.
Diversification Opportunities for Biogen and Monster Beverage
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Biogen and Monster is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Biogen Inc 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 Biogen 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 Biogen Inc 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 Biogen i.e., Biogen and Monster Beverage go up and down completely randomly.
Pair Corralation between Biogen and Monster Beverage
Assuming the 90 days trading horizon Biogen Inc is expected to under-perform the Monster Beverage. In addition to that, Biogen is 1.49 times more volatile than Monster Beverage Corp. It trades about -0.13 of its total potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.19 per unit of volatility. If you would invest 106,294 in Monster Beverage Corp on September 5, 2024 and sell it today you would earn a total of 4,706 from holding Monster Beverage Corp or generate 4.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biogen Inc vs. Monster Beverage Corp
Performance |
| Timeline |
| Biogen Inc |
| Monster Beverage Corp |
Biogen and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biogen and Monster Beverage
The main advantage of trading using opposite Biogen and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biogen 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.| Biogen vs. Monster Beverage Corp | Biogen vs. Cognizant Technology Solutions | Biogen vs. New Oriental Education | Biogen vs. Applied Materials |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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