Correlation Between Naked Wines and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Naked Wines and Monster Beverage 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 Naked Wines and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naked Wines plc and Monster Beverage Corp, you can compare the effects of market volatilities on Naked Wines and Monster Beverage 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 Naked Wines with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Monster Beverage.
Diversification Opportunities for Naked Wines and Monster Beverage
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Naked and Monster is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Monster Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage Corp and Naked Wines 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 Naked Wines plc are associated (or correlated) with Monster Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monster Beverage Corp has no effect on the direction of Naked Wines i.e., Naked Wines and Monster Beverage go up and down completely randomly.
Pair Corralation between Naked Wines and Monster Beverage
Assuming the 90 days horizon Naked Wines plc is expected to generate 5.69 times more return on investment than Monster Beverage. However, Naked Wines is 5.69 times more volatile than Monster Beverage Corp. It trades about 0.06 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.0 per unit of risk. If you would invest 145.00 in Naked Wines plc on August 24, 2024 and sell it today you would earn a total of 126.00 from holding Naked Wines plc or generate 86.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Naked Wines plc vs. Monster Beverage Corp
Performance |
| Timeline |
| Naked Wines plc |
| Monster Beverage Corp |
Naked Wines and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Monster Beverage
The main advantage of trading using opposite Naked Wines and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines position performs unexpectedly, Monster Beverage 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 Monster Beverage will offset losses from the drop in Monster Beverage's long position.| Naked Wines vs. Pernod Ricard SA | Naked Wines vs. Naked Wines plc | Naked Wines vs. Crimson Wine | Naked Wines vs. Brown Forman |
| Monster Beverage vs. Vita Coco | Monster Beverage vs. PepsiCo | Monster Beverage vs. The Coca Cola | Monster Beverage vs. Coca Cola Femsa SAB |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |