Correlation Between Lamb Weston and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Lamb Weston 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 Lamb Weston and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamb Weston Holdings and Monster Beverage Corp, you can compare the effects of market volatilities on Lamb Weston 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 Lamb Weston with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamb Weston and Monster Beverage.
Diversification Opportunities for Lamb Weston and Monster Beverage
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lamb and Monster is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings 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 Lamb Weston 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 Lamb Weston Holdings 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 Lamb Weston i.e., Lamb Weston and Monster Beverage go up and down completely randomly.
Pair Corralation between Lamb Weston and Monster Beverage
Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to under-perform the Monster Beverage. In addition to that, Lamb Weston is 1.89 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 0.0 per unit of volatility. If you would invest 5,515 in Monster Beverage Corp on August 26, 2024 and sell it today you would lose (109.00) from holding Monster Beverage Corp or give up 1.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamb Weston Holdings vs. Monster Beverage Corp
Performance |
| Timeline |
| Lamb Weston Holdings |
| Monster Beverage Corp |
Lamb Weston and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamb Weston and Monster Beverage
The main advantage of trading using opposite Lamb Weston and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamb Weston 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.| Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy, | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA Holdings |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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