Correlation Between Kroger and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Kroger 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 Kroger and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kroger Company and Monster Beverage Corp, you can compare the effects of market volatilities on Kroger 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 Kroger with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and Monster Beverage.
Diversification Opportunities for Kroger and Monster Beverage
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kroger and Monster is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company 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 Kroger 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 Kroger Company 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 Kroger i.e., Kroger and Monster Beverage go up and down completely randomly.
Pair Corralation between Kroger and Monster Beverage
Allowing for the 90-day total investment horizon Kroger Company is expected to generate 0.92 times more return on investment than Monster Beverage. However, Kroger Company is 1.09 times less risky than Monster Beverage. It trades about 0.1 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.0 per unit of risk. If you would invest 4,326 in Kroger Company on August 26, 2024 and sell it today you would earn a total of 1,596 from holding Kroger Company or generate 36.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kroger Company vs. Monster Beverage Corp
Performance |
| Timeline |
| Kroger Company |
| Monster Beverage Corp |
Kroger and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kroger and Monster Beverage
The main advantage of trading using opposite Kroger and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kroger 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.| Kroger vs. Hf Foods Group | Kroger vs. Innovative Food Hldg | Kroger vs. Calavo Growers | Kroger vs. The Chefs Warehouse |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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