Correlation Between Monster Beverage and BOS Better
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and BOS Better 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 BOS Better 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 BOS Better Online, you can compare the effects of market volatilities on Monster Beverage and BOS Better 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 BOS Better. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and BOS Better.
Diversification Opportunities for Monster Beverage and BOS Better
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Monster and BOS is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and BOS Better Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOS Better Online 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 BOS Better. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOS Better Online has no effect on the direction of Monster Beverage i.e., Monster Beverage and BOS Better go up and down completely randomly.
Pair Corralation between Monster Beverage and BOS Better
Given the investment horizon of 90 days Monster Beverage is expected to generate 3.62 times less return on investment than BOS Better. In addition to that, Monster Beverage is 1.57 times more volatile than BOS Better Online. It trades about 0.08 of its total potential returns per unit of risk. BOS Better Online is currently generating about 0.47 per unit of volatility. If you would invest 296.00 in BOS Better Online on August 28, 2024 and sell it today you would earn a total of 41.00 from holding BOS Better Online or generate 13.85% 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. BOS Better Online
Performance |
| Timeline |
| Monster Beverage Corp |
| BOS Better Online |
Monster Beverage and BOS Better Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and BOS Better
The main advantage of trading using opposite Monster Beverage and BOS Better positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, BOS Better 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 BOS Better will offset losses from the drop in BOS Better'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 |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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