Correlation Between Monster Beverage and DINE SAB
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and DINE SAB 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 DINE SAB 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 DINE SAB de, you can compare the effects of market volatilities on Monster Beverage and DINE SAB 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 DINE SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and DINE SAB.
Diversification Opportunities for Monster Beverage and DINE SAB
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Monster and DINE is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and DINE SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DINE SAB de 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 DINE SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DINE SAB de has no effect on the direction of Monster Beverage i.e., Monster Beverage and DINE SAB go up and down completely randomly.
Pair Corralation between Monster Beverage and DINE SAB
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 0.8 times more return on investment than DINE SAB. However, Monster Beverage Corp is 1.24 times less risky than DINE SAB. It trades about 0.03 of its potential returns per unit of risk. DINE SAB de is currently generating about 0.01 per unit of risk. If you would invest 95,800 in Monster Beverage Corp on September 12, 2024 and sell it today you would earn a total of 11,800 from holding Monster Beverage Corp or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. DINE SAB de
Performance |
| Timeline |
| Monster Beverage Corp |
| DINE SAB de |
Monster Beverage and DINE SAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and DINE SAB
The main advantage of trading using opposite Monster Beverage and DINE SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, DINE SAB 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 DINE SAB will offset losses from the drop in DINE SAB's long position.| Monster Beverage vs. Martin Marietta Materials | Monster Beverage vs. Verizon Communications | Monster Beverage vs. Southern Copper | Monster Beverage vs. McEwen Mining |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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