Correlation Between Deluxe and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Deluxe 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 Deluxe and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deluxe and Monster Beverage Corp, you can compare the effects of market volatilities on Deluxe 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 Deluxe with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deluxe and Monster Beverage.
Diversification Opportunities for Deluxe and Monster Beverage
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Deluxe and Monster is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Deluxe 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 Deluxe 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 Deluxe 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 Deluxe i.e., Deluxe and Monster Beverage go up and down completely randomly.
Pair Corralation between Deluxe and Monster Beverage
Considering the 90-day investment horizon Deluxe is expected to generate 1.53 times more return on investment than Monster Beverage. However, Deluxe is 1.53 times more volatile than Monster Beverage Corp. It trades about 0.31 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.12 per unit of risk. If you would invest 1,897 in Deluxe on August 30, 2024 and sell it today you would earn a total of 430.00 from holding Deluxe or generate 22.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Deluxe vs. Monster Beverage Corp
Performance |
| Timeline |
| Deluxe |
| Monster Beverage Corp |
Deluxe and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deluxe and Monster Beverage
The main advantage of trading using opposite Deluxe and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deluxe 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.| Deluxe vs. MSA Safety | Deluxe vs. Resideo Technologies | Deluxe vs. Mistras Group | Deluxe vs. NL Industries |
| Monster Beverage vs. Celsius Holdings | Monster Beverage vs. Coca Cola Consolidated | Monster Beverage vs. Keurig Dr Pepper | Monster Beverage vs. PepsiCo |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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