Correlation Between Monster Beverage and Western Union
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Western Union 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 Western Union 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 Western Union, you can compare the effects of market volatilities on Monster Beverage and Western Union 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 Western Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Western Union.
Diversification Opportunities for Monster Beverage and Western Union
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Monster and Western is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and The Western Union in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union 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 Western Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Union has no effect on the direction of Monster Beverage i.e., Monster Beverage and Western Union go up and down completely randomly.
Pair Corralation between Monster Beverage and Western Union
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 1.18 times more return on investment than Western Union. However, Monster Beverage is 1.18 times more volatile than The Western Union. It trades about 0.21 of its potential returns per unit of risk. The Western Union is currently generating about -0.01 per unit of risk. If you would invest 91,850 in Monster Beverage Corp on September 2, 2024 and sell it today you would earn a total of 21,650 from holding Monster Beverage Corp or generate 23.57% 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. The Western Union
Performance |
| Timeline |
| Monster Beverage Corp |
| Western Union |
Monster Beverage and Western Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Western Union
The main advantage of trading using opposite Monster Beverage and Western Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Western Union 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 Western Union will offset losses from the drop in Western Union's long position.| Monster Beverage vs. DXC Technology | Monster Beverage vs. McEwen Mining | Monster Beverage vs. Grupo Sports World | Monster Beverage vs. Ross Stores |
| Western Union vs. Visa Inc | Western Union vs. American Express | Western Union vs. Capital One Financial | Western Union vs. Gentera SAB de |
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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