Correlation Between Monster Beverage and Las Vegas
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Las Vegas 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 Las Vegas 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 Las Vegas Sands, you can compare the effects of market volatilities on Monster Beverage and Las Vegas 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 Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Las Vegas.
Diversification Opportunities for Monster Beverage and Las Vegas
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and Las is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands 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 Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Monster Beverage i.e., Monster Beverage and Las Vegas go up and down completely randomly.
Pair Corralation between Monster Beverage and Las Vegas
Assuming the 90 days trading horizon Monster Beverage is expected to generate 1.19 times less return on investment than Las Vegas. But when comparing it to its historical volatility, Monster Beverage Corp is 1.24 times less risky than Las Vegas. It trades about 0.02 of its potential returns per unit of risk. Las Vegas Sands is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 93,268 in Las Vegas Sands on September 3, 2024 and sell it today you would earn a total of 13,282 from holding Las Vegas Sands or generate 14.24% 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. Las Vegas Sands
Performance |
| Timeline |
| Monster Beverage Corp |
| Las Vegas Sands |
Monster Beverage and Las Vegas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Las Vegas
The main advantage of trading using opposite Monster Beverage and Las Vegas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Las Vegas 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 Las Vegas will offset losses from the drop in Las Vegas' 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 |
| Las Vegas vs. Southwest Airlines | Las Vegas vs. Hoteles City Express | Las Vegas vs. United Airlines Holdings | Las Vegas vs. DXC 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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