Correlation Between Monster Beverage and MSCI
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and MSCI 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 MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monster Beverage and MSCI Inc, you can compare the effects of market volatilities on Monster Beverage and MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and MSCI.
Diversification Opportunities for Monster Beverage and MSCI
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Monster and MSCI is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage and MSCI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSCI Inc 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 MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSCI Inc has no effect on the direction of Monster Beverage i.e., Monster Beverage and MSCI go up and down completely randomly.
Pair Corralation between Monster Beverage and MSCI
Assuming the 90 days trading horizon Monster Beverage is expected to generate 1.1 times less return on investment than MSCI. But when comparing it to its historical volatility, Monster Beverage is 1.01 times less risky than MSCI. It trades about 0.21 of its potential returns per unit of risk. MSCI Inc is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 7,602 in MSCI Inc on September 2, 2024 and sell it today you would earn a total of 529.00 from holding MSCI Inc or generate 6.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.0% |
| Values | Daily Returns |
Monster Beverage vs. MSCI Inc
Performance |
| Timeline |
| Monster Beverage |
| MSCI Inc |
Monster Beverage and MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and MSCI
The main advantage of trading using opposite Monster Beverage and MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, MSCI 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 MSCI will offset losses from the drop in MSCI's long position.| Monster Beverage vs. G2D Investments | Monster Beverage vs. Healthpeak Properties | Monster Beverage vs. Paycom Software | Monster Beverage vs. Costco Wholesale |
| MSCI vs. Livetech da Bahia | MSCI vs. Raytheon Technologies | MSCI vs. Align Technology | MSCI vs. Monster Beverage |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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