Correlation Between Monster Beverage and MAHLE Metal
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and MAHLE Metal 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 MAHLE Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monster Beverage and MAHLE Metal Leve, you can compare the effects of market volatilities on Monster Beverage and MAHLE Metal 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 MAHLE Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and MAHLE Metal.
Diversification Opportunities for Monster Beverage and MAHLE Metal
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Monster and MAHLE is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage and MAHLE Metal Leve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAHLE Metal Leve 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 MAHLE Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAHLE Metal Leve has no effect on the direction of Monster Beverage i.e., Monster Beverage and MAHLE Metal go up and down completely randomly.
Pair Corralation between Monster Beverage and MAHLE Metal
Assuming the 90 days trading horizon Monster Beverage is expected to generate 2.28 times less return on investment than MAHLE Metal. But when comparing it to its historical volatility, Monster Beverage is 1.59 times less risky than MAHLE Metal. It trades about 0.03 of its potential returns per unit of risk. MAHLE Metal Leve is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,951 in MAHLE Metal Leve on December 11, 2024 and sell it today you would earn a total of 961.00 from holding MAHLE Metal Leve or generate 49.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Monster Beverage vs. MAHLE Metal Leve
Performance |
| Timeline |
| Monster Beverage |
| MAHLE Metal Leve |
Monster Beverage and MAHLE Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and MAHLE Metal
The main advantage of trading using opposite Monster Beverage and MAHLE Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, MAHLE Metal 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 MAHLE Metal will offset losses from the drop in MAHLE Metal's long position.| Monster Beverage vs. LPL Financial Holdings | ||
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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