Correlation Between Melco Resorts and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Melco Resorts 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 Melco Resorts and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melco Resorts Entertainment and Monster Beverage, you can compare the effects of market volatilities on Melco Resorts 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 Melco Resorts with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melco Resorts and Monster Beverage.
Diversification Opportunities for Melco Resorts and Monster Beverage
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Melco and Monster is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Melco Resorts Entertainment and Monster Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage and Melco Resorts 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 Melco Resorts Entertainment 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 has no effect on the direction of Melco Resorts i.e., Melco Resorts and Monster Beverage go up and down completely randomly.
Pair Corralation between Melco Resorts and Monster Beverage
Assuming the 90 days trading horizon Melco Resorts Entertainment is expected to under-perform the Monster Beverage. In addition to that, Melco Resorts is 2.08 times more volatile than Monster Beverage. It trades about -0.35 of its total potential returns per unit of risk. Monster Beverage is currently generating about -0.37 per unit of volatility. If you would invest 4,056 in Monster Beverage on October 25, 2024 and sell it today you would lose (300.00) from holding Monster Beverage or give up 7.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melco Resorts Entertainment vs. Monster Beverage
Performance |
| Timeline |
| Melco Resorts Entert |
| Monster Beverage |
Melco Resorts and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melco Resorts and Monster Beverage
The main advantage of trading using opposite Melco Resorts and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melco Resorts 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.| Melco Resorts vs. Chunghwa Telecom Co, | Melco Resorts vs. KB Financial Group | Melco Resorts vs. The Hartford Financial | Melco Resorts vs. Broadridge Financial Solutions, |
| Monster Beverage vs. Melco Resorts Entertainment | Monster Beverage vs. Molson Coors Beverage | Monster Beverage vs. Alaska Air Group, | Monster Beverage vs. United Natural Foods, |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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