Correlation Between Monster Beverage and Mesa Air
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Mesa Air 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 Mesa Air 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 Mesa Air Group, you can compare the effects of market volatilities on Monster Beverage and Mesa Air 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 Mesa Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Mesa Air.
Diversification Opportunities for Monster Beverage and Mesa Air
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Monster and Mesa is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Mesa Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesa Air Group 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 Mesa Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesa Air Group has no effect on the direction of Monster Beverage i.e., Monster Beverage and Mesa Air go up and down completely randomly.
Pair Corralation between Monster Beverage and Mesa Air
Given the investment horizon of 90 days Monster Beverage is expected to generate 1.96 times less return on investment than Mesa Air. But when comparing it to its historical volatility, Monster Beverage Corp is 1.82 times less risky than Mesa Air. It trades about 0.09 of its potential returns per unit of risk. Mesa Air Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 92.00 in Mesa Air Group on August 28, 2024 and sell it today you would earn a total of 6.00 from holding Mesa Air Group or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Mesa Air Group
Performance |
| Timeline |
| Monster Beverage Corp |
| Mesa Air Group |
Monster Beverage and Mesa Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Mesa Air
The main advantage of trading using opposite Monster Beverage and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Mesa Air 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 Mesa Air will offset losses from the drop in Mesa Air'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 |
| Mesa Air vs. Allegiant Travel | Mesa Air vs. Sun Country Airlines | Mesa Air vs. Frontier Group Holdings | Mesa Air vs. Azul SA |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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