Correlation Between Monster Beverage and Nomura Holdings
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Nomura Holdings 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 Nomura Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monster Beverage and Nomura Holdings, you can compare the effects of market volatilities on Monster Beverage and Nomura Holdings 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 Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Nomura Holdings.
Diversification Opportunities for Monster Beverage and Nomura Holdings
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and Nomura is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage and Nomura Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings 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 Nomura Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Holdings has no effect on the direction of Monster Beverage i.e., Monster Beverage and Nomura Holdings go up and down completely randomly.
Pair Corralation between Monster Beverage and Nomura Holdings
Assuming the 90 days trading horizon Monster Beverage is expected to generate 2.74 times less return on investment than Nomura Holdings. But when comparing it to its historical volatility, Monster Beverage is 1.39 times less risky than Nomura Holdings. It trades about 0.19 of its potential returns per unit of risk. Nomura Holdings is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 3,018 in Nomura Holdings on September 1, 2024 and sell it today you would earn a total of 598.00 from holding Nomura Holdings or generate 19.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Monster Beverage vs. Nomura Holdings
Performance |
| Timeline |
| Monster Beverage |
| Nomura Holdings |
Monster Beverage and Nomura Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Nomura Holdings
The main advantage of trading using opposite Monster Beverage and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Nomura Holdings 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 Nomura Holdings will offset losses from the drop in Nomura Holdings' long position.| Monster Beverage vs. Fras le SA | Monster Beverage vs. Energisa SA | Monster Beverage vs. Clave Indices De | Monster Beverage vs. BTG Pactual Logstica |
| Nomura Holdings vs. Prudential Financial | Nomura Holdings vs. United States Steel | Nomura Holdings vs. Broadcom | Nomura Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |