Correlation Between Monster Beverage and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Ameriprise Financial 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 Ameriprise Financial 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 Ameriprise Financial, you can compare the effects of market volatilities on Monster Beverage and Ameriprise Financial 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 Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Ameriprise Financial.
Diversification Opportunities for Monster Beverage and Ameriprise Financial
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and Ameriprise is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial 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 Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of Monster Beverage i.e., Monster Beverage and Ameriprise Financial go up and down completely randomly.
Pair Corralation between Monster Beverage and Ameriprise Financial
Assuming the 90 days trading horizon Monster Beverage is expected to generate 4.12 times less return on investment than Ameriprise Financial. But when comparing it to its historical volatility, Monster Beverage Corp is 5.46 times less risky than Ameriprise Financial. It trades about 0.29 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 928,741 in Ameriprise Financial on August 31, 2024 and sell it today you would earn a total of 229,412 from holding Ameriprise Financial or generate 24.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Ameriprise Financial
Performance |
| Timeline |
| Monster Beverage Corp |
| Ameriprise Financial |
Monster Beverage and Ameriprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Ameriprise Financial
The main advantage of trading using opposite Monster Beverage and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Ameriprise Financial 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 Ameriprise Financial will offset losses from the drop in Ameriprise Financial's long position.| Monster Beverage vs. The Select Sector | Monster Beverage vs. Promotora y Operadora | Monster Beverage vs. SPDR Series Trust | Monster Beverage vs. iShares Trust |
| Ameriprise Financial vs. First Majestic Silver | Ameriprise Financial vs. FibraHotel | Ameriprise Financial vs. Monster Beverage Corp | Ameriprise Financial 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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