Correlation Between Monster Beverage and FG Merger
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and FG Merger 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 FG Merger 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 FG Merger Corp, you can compare the effects of market volatilities on Monster Beverage and FG Merger 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 FG Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and FG Merger.
Diversification Opportunities for Monster Beverage and FG Merger
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Monster and FGMCW is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and FG Merger Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FG Merger 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 FG Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FG Merger Corp has no effect on the direction of Monster Beverage i.e., Monster Beverage and FG Merger go up and down completely randomly.
Pair Corralation between Monster Beverage and FG Merger
Given the investment horizon of 90 days Monster Beverage is expected to generate 483.71 times less return on investment than FG Merger. But when comparing it to its historical volatility, Monster Beverage Corp is 32.32 times less risky than FG Merger. It trades about 0.01 of its potential returns per unit of risk. FG Merger Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 5.00 in FG Merger Corp on September 14, 2024 and sell it today you would earn a total of 5.00 from holding FG Merger Corp or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 15.35% |
| Values | Daily Returns |
Monster Beverage Corp vs. FG Merger Corp
Performance |
| Timeline |
| Monster Beverage Corp |
| FG Merger Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Monster Beverage and FG Merger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and FG Merger
The main advantage of trading using opposite Monster Beverage and FG Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, FG Merger 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 FG Merger will offset losses from the drop in FG Merger's long position.| Monster Beverage vs. Coca Cola Femsa SAB | Monster Beverage vs. Keurig Dr Pepper | Monster Beverage vs. Embotelladora Andina SA | Monster Beverage vs. Coca Cola European Partners |
| FG Merger vs. Monster Beverage Corp | FG Merger vs. Oatly Group AB | FG Merger vs. High Performance Beverages | FG Merger vs. Hurco Companies |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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