Correlation Between Monster Beverage and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Naked Wines 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 Naked Wines 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 Naked Wines plc, you can compare the effects of market volatilities on Monster Beverage and Naked Wines 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 Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Naked Wines.
Diversification Opportunities for Monster Beverage and Naked Wines
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Monster and Naked is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Naked Wines plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naked Wines plc 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 Naked Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naked Wines plc has no effect on the direction of Monster Beverage i.e., Monster Beverage and Naked Wines go up and down completely randomly.
Pair Corralation between Monster Beverage and Naked Wines
Given the investment horizon of 90 days Monster Beverage is expected to generate 1.93 times less return on investment than Naked Wines. In addition to that, Monster Beverage is 1.25 times more volatile than Naked Wines plc. It trades about 0.09 of its total potential returns per unit of risk. Naked Wines plc is currently generating about 0.22 per unit of volatility. If you would invest 252.00 in Naked Wines plc on August 28, 2024 and sell it today you would earn a total of 19.00 from holding Naked Wines plc or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Naked Wines plc
Performance |
| Timeline |
| Monster Beverage Corp |
| Naked Wines plc |
Monster Beverage and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Naked Wines
The main advantage of trading using opposite Monster Beverage and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Naked Wines 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 Naked Wines will offset losses from the drop in Naked Wines' long position.| Monster Beverage vs. Vita Coco | Monster Beverage vs. PepsiCo | Monster Beverage vs. The Coca Cola | Monster Beverage vs. Coca Cola Femsa SAB |
| Naked Wines vs. Diageo PLC ADR | Naked Wines vs. Constellation Brands Class | Naked Wines vs. Morningstar Unconstrained Allocation | Naked Wines vs. SEI Investments |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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