Correlation Between Cebu Air and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Cebu Air 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 Cebu Air and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cebu Air ADR and Monster Beverage Corp, you can compare the effects of market volatilities on Cebu Air 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 Cebu Air with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and Monster Beverage.
Diversification Opportunities for Cebu Air and Monster Beverage
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cebu and Monster is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR 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 Cebu Air 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 Cebu Air ADR 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 Cebu Air i.e., Cebu Air and Monster Beverage go up and down completely randomly.
Pair Corralation between Cebu Air and Monster Beverage
Assuming the 90 days horizon Cebu Air ADR is expected to under-perform the Monster Beverage. In addition to that, Cebu Air is 2.32 times more volatile than Monster Beverage Corp. It trades about -0.02 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 5,022 in Monster Beverage Corp on September 3, 2024 and sell it today you would earn a total of 491.00 from holding Monster Beverage Corp or generate 9.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Cebu Air ADR vs. Monster Beverage Corp
Performance |
| Timeline |
| Cebu Air ADR |
| Monster Beverage Corp |
Cebu Air and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and Monster Beverage
The main advantage of trading using opposite Cebu Air and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air 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.| Cebu Air vs. Finnair Oyj | Cebu Air vs. easyJet plc | Cebu Air vs. Norse Atlantic ASA | Cebu Air vs. Air New Zealand |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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