Correlation Between Monster Beverage and KinderCare Learning
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and KinderCare Learning 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 KinderCare Learning 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 KinderCare Learning Companies,, you can compare the effects of market volatilities on Monster Beverage and KinderCare Learning 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 KinderCare Learning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and KinderCare Learning.
Diversification Opportunities for Monster Beverage and KinderCare Learning
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Monster and KinderCare is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and KinderCare Learning Companies, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KinderCare Learning 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 KinderCare Learning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KinderCare Learning has no effect on the direction of Monster Beverage i.e., Monster Beverage and KinderCare Learning go up and down completely randomly.
Pair Corralation between Monster Beverage and KinderCare Learning
Given the investment horizon of 90 days Monster Beverage Corp is expected to generate 0.36 times more return on investment than KinderCare Learning. However, Monster Beverage Corp is 2.8 times less risky than KinderCare Learning. It trades about -0.19 of its potential returns per unit of risk. KinderCare Learning Companies, is currently generating about -0.23 per unit of risk. If you would invest 5,638 in Monster Beverage Corp on September 14, 2024 and sell it today you would lose (428.00) from holding Monster Beverage Corp or give up 7.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. KinderCare Learning Companies,
Performance |
| Timeline |
| Monster Beverage Corp |
| KinderCare Learning |
Monster Beverage and KinderCare Learning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and KinderCare Learning
The main advantage of trading using opposite Monster Beverage and KinderCare Learning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, KinderCare Learning 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 KinderCare Learning will offset losses from the drop in KinderCare Learning'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 |
| KinderCare Learning vs. Laureate Education | KinderCare Learning vs. American Public Education | KinderCare Learning vs. Lincoln Educational Services | KinderCare Learning vs. Adtalem Global Education |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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