Correlation Between InterContinental and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both InterContinental 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 InterContinental and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InterContinental Hotels Group and Monster Beverage Corp, you can compare the effects of market volatilities on InterContinental 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 InterContinental with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Monster Beverage.
Diversification Opportunities for InterContinental and Monster Beverage
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InterContinental and Monster is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group 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 InterContinental 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 InterContinental Hotels Group 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 InterContinental i.e., InterContinental and Monster Beverage go up and down completely randomly.
Pair Corralation between InterContinental and Monster Beverage
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.86 times more return on investment than Monster Beverage. However, InterContinental Hotels Group is 1.17 times less risky than Monster Beverage. It trades about 0.14 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about -0.01 per unit of risk. If you would invest 525,051 in InterContinental Hotels Group on September 12, 2024 and sell it today you would earn a total of 450,749 from holding InterContinental Hotels Group or generate 85.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.95% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Monster Beverage Corp
Performance |
| Timeline |
| InterContinental Hotels |
| Monster Beverage Corp |
InterContinental and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Monster Beverage
The main advantage of trading using opposite InterContinental and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental 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.| InterContinental vs. National Atomic Co | InterContinental vs. OTP Bank Nyrt | InterContinental vs. Samsung Electronics Co | InterContinental vs. Samsung Electronics Co |
| Monster Beverage vs. Hong Kong Land | Monster Beverage vs. Neometals | Monster Beverage vs. Coor Service Management | Monster Beverage vs. Fidelity Sustainable USD |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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