Correlation Between Monster Beverage and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and BJs Restaurants 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 BJs Restaurants 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 BJs Restaurants, you can compare the effects of market volatilities on Monster Beverage and BJs Restaurants 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 BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and BJs Restaurants.
Diversification Opportunities for Monster Beverage and BJs Restaurants
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and BJs is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants 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 BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of Monster Beverage i.e., Monster Beverage and BJs Restaurants go up and down completely randomly.
Pair Corralation between Monster Beverage and BJs Restaurants
Given the investment horizon of 90 days Monster Beverage is expected to generate 5.19 times less return on investment than BJs Restaurants. But when comparing it to its historical volatility, Monster Beverage Corp is 1.89 times less risky than BJs Restaurants. It trades about 0.01 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,101 in BJs Restaurants on September 19, 2024 and sell it today you would earn a total of 632.00 from holding BJs Restaurants or generate 20.38% 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. BJs Restaurants
Performance |
| Timeline |
| Monster Beverage Corp |
| BJs Restaurants |
Monster Beverage and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and BJs Restaurants
The main advantage of trading using opposite Monster Beverage and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, BJs Restaurants 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 BJs Restaurants will offset losses from the drop in BJs Restaurants' long position.| Monster Beverage vs. Vita Coco | Monster Beverage vs. PepsiCo | Monster Beverage vs. The Coca Cola | Monster Beverage vs. Coca Cola Femsa SAB |
| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
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 CEOs Directory module to screen CEOs from public companies around the world.
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