Correlation Between Monster Beverage and Xiaomi
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Xiaomi 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 Xiaomi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monster Beverage Corp and Xiaomi, you can compare the effects of market volatilities on Monster Beverage and Xiaomi 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 Xiaomi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Xiaomi.
Diversification Opportunities for Monster Beverage and Xiaomi
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Monster and Xiaomi is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Xiaomi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiaomi 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 Corp are associated (or correlated) with Xiaomi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiaomi has no effect on the direction of Monster Beverage i.e., Monster Beverage and Xiaomi go up and down completely randomly.
Pair Corralation between Monster Beverage and Xiaomi
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 0.3 times more return on investment than Xiaomi. However, Monster Beverage Corp is 3.36 times less risky than Xiaomi. It trades about 0.35 of its potential returns per unit of risk. Xiaomi is currently generating about 0.02 per unit of risk. If you would invest 106,294 in Monster Beverage Corp on September 3, 2024 and sell it today you would earn a total of 7,206 from holding Monster Beverage Corp or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Xiaomi
Performance |
| Timeline |
| Monster Beverage Corp |
| Xiaomi |
Monster Beverage and Xiaomi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Xiaomi
The main advantage of trading using opposite Monster Beverage and Xiaomi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Xiaomi 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 Xiaomi will offset losses from the drop in Xiaomi's long position.| Monster Beverage vs. The Select Sector | Monster Beverage vs. Promotora y Operadora | Monster Beverage vs. SPDR Series Trust | Monster Beverage vs. Vanguard World |
| Xiaomi vs. GMxico Transportes SAB | Xiaomi vs. First Majestic Silver | Xiaomi vs. UnitedHealth Group Incorporated | Xiaomi vs. Verizon Communications |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |