Correlation Between Monster Beverage and Bank of Nova Scotia
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Bank of Nova Scotia 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 Bank of Nova Scotia 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 The Bank of, you can compare the effects of market volatilities on Monster Beverage and Bank of Nova Scotia 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 Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Bank of Nova Scotia.
Diversification Opportunities for Monster Beverage and Bank of Nova Scotia
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and Bank is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Nova Scotia 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 Bank of Nova Scotia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Nova Scotia has no effect on the direction of Monster Beverage i.e., Monster Beverage and Bank of Nova Scotia go up and down completely randomly.
Pair Corralation between Monster Beverage and Bank of Nova Scotia
Assuming the 90 days trading horizon Monster Beverage is expected to generate 2.41 times less return on investment than Bank of Nova Scotia. In addition to that, Monster Beverage is 1.3 times more volatile than The Bank of. It trades about 0.03 of its total potential returns per unit of risk. The Bank of is currently generating about 0.09 per unit of volatility. If you would invest 79,984 in The Bank of on August 31, 2024 and sell it today you would earn a total of 40,016 from holding The Bank of or generate 50.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Monster Beverage Corp vs. The Bank of
Performance |
| Timeline |
| Monster Beverage Corp |
| Bank of Nova Scotia |
Monster Beverage and Bank of Nova Scotia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Bank of Nova Scotia
The main advantage of trading using opposite Monster Beverage and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Bank of Nova Scotia 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 Bank of Nova Scotia will offset losses from the drop in Bank of Nova Scotia'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 |
| Bank of Nova Scotia vs. CVS Health | Bank of Nova Scotia vs. Capital One Financial | Bank of Nova Scotia vs. Lloyds Banking Group | Bank of Nova Scotia vs. Monster Beverage Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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