Correlation Between Monster Beverage and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Berkshire Hathaway 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 Monster Beverage and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monster Beverage and Berkshire Hathaway, you can compare the effects of market volatilities on Monster Beverage and Berkshire Hathaway 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 Monster Beverage with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Berkshire Hathaway.
Diversification Opportunities for Monster Beverage and Berkshire Hathaway
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Monster and Berkshire is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Monster Beverage 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 Monster Beverage are associated (or correlated) with Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of Monster Beverage i.e., Monster Beverage and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Monster Beverage and Berkshire Hathaway
Assuming the 90 days trading horizon Monster Beverage is expected to under-perform the Berkshire Hathaway. In addition to that, Monster Beverage is 1.67 times more volatile than Berkshire Hathaway. It trades about -0.06 of its total potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.07 per unit of volatility. If you would invest 13,588 in Berkshire Hathaway on September 14, 2024 and sell it today you would earn a total of 213.00 from holding Berkshire Hathaway or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage vs. Berkshire Hathaway
Performance |
| Timeline |
| Monster Beverage |
| Berkshire Hathaway |
Monster Beverage and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Berkshire Hathaway
The main advantage of trading using opposite Monster Beverage and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Berkshire Hathaway 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 Berkshire Hathaway will offset losses from the drop in Berkshire Hathaway's long position.| Monster Beverage vs. Cognizant Technology Solutions | Monster Beverage vs. Mitsubishi UFJ Financial | Monster Beverage vs. GX AI TECH | Monster Beverage vs. Align Technology |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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