Correlation Between Monster Beverage and Intel
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Intel 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 Intel 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 Intel, you can compare the effects of market volatilities on Monster Beverage and Intel 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 Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Intel.
Diversification Opportunities for Monster Beverage and Intel
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and Intel is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Monster Beverage i.e., Monster Beverage and Intel go up and down completely randomly.
Pair Corralation between Monster Beverage and Intel
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 0.48 times more return on investment than Intel. However, Monster Beverage Corp is 2.07 times less risky than Intel. It trades about -0.05 of its potential returns per unit of risk. Intel is currently generating about -0.43 per unit of risk. If you would invest 109,200 in Monster Beverage Corp on September 12, 2024 and sell it today you would lose (1,600) from holding Monster Beverage Corp or give up 1.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Intel
Performance |
| Timeline |
| Monster Beverage Corp |
| Intel |
Monster Beverage and Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Intel
The main advantage of trading using opposite Monster Beverage and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel's long position.| Monster Beverage vs. Martin Marietta Materials | Monster Beverage vs. Verizon Communications | Monster Beverage vs. Southern Copper | Monster Beverage vs. McEwen Mining |
| Intel vs. NVIDIA | Intel vs. Taiwan Semiconductor Manufacturing | Intel vs. Advanced Micro Devices | Intel vs. Micron Technology |
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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