Correlation Between Lyft and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Lyft 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 Lyft and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyft Inc and Monster Beverage Corp, you can compare the effects of market volatilities on Lyft 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 Lyft with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyft and Monster Beverage.
Diversification Opportunities for Lyft and Monster Beverage
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lyft and Monster is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Lyft Inc 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 Lyft 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 Lyft Inc 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 Lyft i.e., Lyft and Monster Beverage go up and down completely randomly.
Pair Corralation between Lyft and Monster Beverage
Assuming the 90 days horizon Lyft Inc is expected to generate 2.86 times more return on investment than Monster Beverage. However, Lyft is 2.86 times more volatile than Monster Beverage Corp. It trades about 0.02 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 1,383 in Lyft Inc on September 14, 2024 and sell it today you would earn a total of 42.00 from holding Lyft Inc or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyft Inc vs. Monster Beverage Corp
Performance |
| Timeline |
| Lyft Inc |
| Monster Beverage Corp |
Lyft and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyft and Monster Beverage
The main advantage of trading using opposite Lyft and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyft 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.| Lyft vs. OAKTRSPECLENDNEW | Lyft vs. The Hanover Insurance | Lyft vs. REVO INSURANCE SPA | Lyft vs. Tradegate AG Wertpapierhandelsbank |
| Monster Beverage vs. DXC Technology Co | Monster Beverage vs. Renesas Electronics | Monster Beverage vs. AECOM TECHNOLOGY | Monster Beverage vs. Vishay Intertechnology |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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