Correlation Between DAX Index and Monster Beverage
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By analyzing existing cross correlation between DAX Index and Monster Beverage Corp, you can compare the effects of market volatilities on DAX Index 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 DAX Index with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Monster Beverage.
Diversification Opportunities for DAX Index and Monster Beverage
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DAX and Monster is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index 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 DAX Index 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 DAX Index 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 DAX Index i.e., DAX Index and Monster Beverage go up and down completely randomly.
Pair Corralation between DAX Index and Monster Beverage
Assuming the 90 days trading horizon DAX Index is expected to generate 1.89 times less return on investment than Monster Beverage. But when comparing it to its historical volatility, DAX Index is 2.26 times less risky than Monster Beverage. It trades about 0.05 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,753 in Monster Beverage Corp on August 31, 2024 and sell it today you would earn a total of 423.00 from holding Monster Beverage Corp or generate 8.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. Monster Beverage Corp
Performance |
| Timeline |
DAX Index and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Monster Beverage Corp
Pair trading matchups for Monster Beverage
Pair Trading with DAX Index and Monster Beverage
The main advantage of trading using opposite DAX Index and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index 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.| DAX Index vs. Magnachip Semiconductor | DAX Index vs. Taiwan Semiconductor Manufacturing | DAX Index vs. Broadcom | DAX Index vs. MagnaChip Semiconductor Corp |
| Monster Beverage vs. COSMOSTEEL HLDGS | Monster Beverage vs. CosmoSteel Holdings Limited | Monster Beverage vs. Khiron Life Sciences | Monster Beverage vs. Daido Steel Co |
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