Correlation Between Monster Beverage and Snowflake
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Snowflake 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 Snowflake into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monster Beverage and Snowflake, you can compare the effects of market volatilities on Monster Beverage and Snowflake 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 Snowflake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Snowflake.
Diversification Opportunities for Monster Beverage and Snowflake
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Monster and Snowflake is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage and Snowflake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snowflake 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 Snowflake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snowflake has no effect on the direction of Monster Beverage i.e., Monster Beverage and Snowflake go up and down completely randomly.
Pair Corralation between Monster Beverage and Snowflake
Assuming the 90 days trading horizon Monster Beverage is expected to generate 0.52 times more return on investment than Snowflake. However, Monster Beverage is 1.94 times less risky than Snowflake. It trades about 0.04 of its potential returns per unit of risk. Snowflake is currently generating about -0.01 per unit of risk. If you would invest 3,494 in Monster Beverage on December 11, 2024 and sell it today you would earn a total of 606.00 from holding Monster Beverage or generate 17.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage vs. Snowflake
Performance |
| Timeline |
| Monster Beverage |
| Snowflake |
Monster Beverage and Snowflake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Snowflake
The main advantage of trading using opposite Monster Beverage and Snowflake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Snowflake 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 Snowflake will offset losses from the drop in Snowflake'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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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