Correlation Between Monster Beverage and UBS Group
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and UBS Group 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 UBS Group 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 UBS Group AG, you can compare the effects of market volatilities on Monster Beverage and UBS Group 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 UBS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and UBS Group.
Diversification Opportunities for Monster Beverage and UBS Group
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Monster and UBS is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and UBS Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Group AG 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 UBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Group AG has no effect on the direction of Monster Beverage i.e., Monster Beverage and UBS Group go up and down completely randomly.
Pair Corralation between Monster Beverage and UBS Group
Assuming the 90 days trading horizon Monster Beverage is expected to generate 2.91 times less return on investment than UBS Group. But when comparing it to its historical volatility, Monster Beverage Corp is 1.8 times less risky than UBS Group. It trades about 0.12 of its potential returns per unit of risk. UBS Group AG is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 64,000 in UBS Group AG on November 27, 2024 and sell it today you would earn a total of 8,000 from holding UBS Group AG or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. UBS Group AG
Performance |
| Timeline |
| Monster Beverage Corp |
| UBS Group AG |
Monster Beverage and UBS Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and UBS Group
The main advantage of trading using opposite Monster Beverage and UBS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, UBS Group 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 UBS Group will offset losses from the drop in UBS Group's long position.| Monster Beverage vs. Capital One Financial | Monster Beverage vs. Delta Air Lines | Monster Beverage vs. Southern Copper | Monster Beverage vs. New Oriental Education |
| UBS Group vs. FIBRA Storage | UBS Group vs. Air Transport Services | UBS Group vs. Verizon Communications | UBS Group vs. Ross Stores |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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