Correlation Between Monster Beverage and Invitation Homes
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Invitation Homes 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 Invitation Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monster Beverage and Invitation Homes, you can compare the effects of market volatilities on Monster Beverage and Invitation Homes 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 Invitation Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Invitation Homes.
Diversification Opportunities for Monster Beverage and Invitation Homes
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Monster and Invitation is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage and Invitation Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invitation Homes 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 Invitation Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invitation Homes has no effect on the direction of Monster Beverage i.e., Monster Beverage and Invitation Homes go up and down completely randomly.
Pair Corralation between Monster Beverage and Invitation Homes
Assuming the 90 days trading horizon Monster Beverage is expected to generate 1.74 times more return on investment than Invitation Homes. However, Monster Beverage is 1.74 times more volatile than Invitation Homes. It trades about -0.03 of its potential returns per unit of risk. Invitation Homes is currently generating about -0.24 per unit of risk. If you would invest 3,992 in Monster Beverage on October 11, 2024 and sell it today you would lose (45.00) from holding Monster Beverage or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 63.16% |
| Values | Daily Returns |
Monster Beverage vs. Invitation Homes
Performance |
| Timeline |
| Monster Beverage |
| Invitation Homes |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Monster Beverage and Invitation Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Invitation Homes
The main advantage of trading using opposite Monster Beverage and Invitation Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Invitation Homes 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 Invitation Homes will offset losses from the drop in Invitation Homes' long position.| Monster Beverage vs. Citizens Financial Group, | Monster Beverage vs. Ameriprise Financial | Monster Beverage vs. Broadridge Financial Solutions, | Monster Beverage vs. Discover Financial Services |
| Invitation Homes vs. Check Point Software | Invitation Homes vs. Monster Beverage | Invitation Homes vs. Iron Mountain Incorporated | Invitation Homes vs. Unity Software |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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