Correlation Between Monster Beverage and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Hooker Furniture 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 Hooker Furniture 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 Hooker Furniture, you can compare the effects of market volatilities on Monster Beverage and Hooker Furniture 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 Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Hooker Furniture.
Diversification Opportunities for Monster Beverage and Hooker Furniture
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and Hooker is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture 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 Hooker Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hooker Furniture has no effect on the direction of Monster Beverage i.e., Monster Beverage and Hooker Furniture go up and down completely randomly.
Pair Corralation between Monster Beverage and Hooker Furniture
Given the investment horizon of 90 days Monster Beverage Corp is expected to under-perform the Hooker Furniture. But the stock apears to be less risky and, when comparing its historical volatility, Monster Beverage Corp is 1.91 times less risky than Hooker Furniture. The stock trades about 0.0 of its potential returns per unit of risk. The Hooker Furniture is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,587 in Hooker Furniture on August 31, 2024 and sell it today you would earn a total of 286.00 from holding Hooker Furniture or generate 18.02% 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. Hooker Furniture
Performance |
| Timeline |
| Monster Beverage Corp |
| Hooker Furniture |
Monster Beverage and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Hooker Furniture
The main advantage of trading using opposite Monster Beverage and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Hooker Furniture 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 Hooker Furniture will offset losses from the drop in Hooker Furniture'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 |
| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Natuzzi SpA | Hooker Furniture vs. Flexsteel Industries | Hooker Furniture vs. Hamilton Beach Brands |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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