Correlation Between Monster Beverage and Avient Corp
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Avient Corp 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 Avient Corp 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 Avient Corp, you can compare the effects of market volatilities on Monster Beverage and Avient Corp 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 Avient Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Avient Corp.
Diversification Opportunities for Monster Beverage and Avient Corp
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Monster and Avient is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Avient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avient Corp 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 Avient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avient Corp has no effect on the direction of Monster Beverage i.e., Monster Beverage and Avient Corp go up and down completely randomly.
Pair Corralation between Monster Beverage and Avient Corp
Given the investment horizon of 90 days Monster Beverage is expected to generate 4.6 times less return on investment than Avient Corp. But when comparing it to its historical volatility, Monster Beverage Corp is 1.42 times less risky than Avient Corp. It trades about 0.02 of its potential returns per unit of risk. Avient Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,205 in Avient Corp on August 28, 2024 and sell it today you would earn a total of 2,045 from holding Avient Corp or generate 63.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Avient Corp
Performance |
| Timeline |
| Monster Beverage Corp |
| Avient Corp |
Monster Beverage and Avient Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Avient Corp
The main advantage of trading using opposite Monster Beverage and Avient Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Avient Corp 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 Avient Corp will offset losses from the drop in Avient Corp's long position.| Monster Beverage vs. Vita Coco | Monster Beverage vs. PepsiCo | Monster Beverage vs. The Coca Cola | Monster Beverage vs. Coca Cola Femsa SAB |
| Avient Corp vs. Oil Dri | Avient Corp vs. H B Fuller | Avient Corp vs. Northern Technologies | Avient Corp vs. Cabot |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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