Correlation Between Monster Beverage and JetBlue Airways
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and JetBlue Airways 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 JetBlue Airways 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 JetBlue Airways Corp, you can compare the effects of market volatilities on Monster Beverage and JetBlue Airways 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 JetBlue Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and JetBlue Airways.
Diversification Opportunities for Monster Beverage and JetBlue Airways
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and JetBlue is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and JetBlue Airways Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JetBlue Airways 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 JetBlue Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JetBlue Airways Corp has no effect on the direction of Monster Beverage i.e., Monster Beverage and JetBlue Airways go up and down completely randomly.
Pair Corralation between Monster Beverage and JetBlue Airways
Given the investment horizon of 90 days Monster Beverage Corp is expected to generate 0.36 times more return on investment than JetBlue Airways. However, Monster Beverage Corp is 2.76 times less risky than JetBlue Airways. It trades about 0.09 of its potential returns per unit of risk. JetBlue Airways Corp is currently generating about -0.12 per unit of risk. If you would invest 5,310 in Monster Beverage Corp on August 28, 2024 and sell it today you would earn a total of 188.00 from holding Monster Beverage Corp or generate 3.54% 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. JetBlue Airways Corp
Performance |
| Timeline |
| Monster Beverage Corp |
| JetBlue Airways Corp |
Monster Beverage and JetBlue Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and JetBlue Airways
The main advantage of trading using opposite Monster Beverage and JetBlue Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, JetBlue Airways 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 JetBlue Airways will offset losses from the drop in JetBlue Airways' long position.| Monster Beverage vs. Vita Coco | Monster Beverage vs. PepsiCo | Monster Beverage vs. The Coca Cola | Monster Beverage vs. Coca Cola Femsa SAB |
| JetBlue Airways vs. Frontier Group Holdings | JetBlue Airways vs. Southwest Airlines | JetBlue Airways vs. United Airlines Holdings | JetBlue Airways vs. American Airlines Group |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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