Correlation Between Monster Beverage and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Cardinal Health 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 Cardinal Health 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 Cardinal Health, you can compare the effects of market volatilities on Monster Beverage and Cardinal Health 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 Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Cardinal Health.
Diversification Opportunities for Monster Beverage and Cardinal Health
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Monster and Cardinal is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health 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 Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Monster Beverage i.e., Monster Beverage and Cardinal Health go up and down completely randomly.
Pair Corralation between Monster Beverage and Cardinal Health
Given the investment horizon of 90 days Monster Beverage is expected to generate 5.17 times less return on investment than Cardinal Health. In addition to that, Monster Beverage is 1.04 times more volatile than Cardinal Health. It trades about 0.02 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.08 per unit of volatility. If you would invest 7,421 in Cardinal Health on August 26, 2024 and sell it today you would earn a total of 4,763 from holding Cardinal Health or generate 64.18% 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. Cardinal Health
Performance |
| Timeline |
| Monster Beverage Corp |
| Cardinal Health |
Monster Beverage and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Cardinal Health
The main advantage of trading using opposite Monster Beverage and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Cardinal Health 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 Cardinal Health will offset losses from the drop in Cardinal Health'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 |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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