Correlation Between Monster Beverage and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Merit Medical 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 Merit Medical 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 Merit Medical Systems, you can compare the effects of market volatilities on Monster Beverage and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Merit Medical.
Diversification Opportunities for Monster Beverage and Merit Medical
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and Merit is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Monster Beverage i.e., Monster Beverage and Merit Medical go up and down completely randomly.
Pair Corralation between Monster Beverage and Merit Medical
Given the investment horizon of 90 days Monster Beverage is expected to generate 1.49 times less return on investment than Merit Medical. In addition to that, Monster Beverage is 1.37 times more volatile than Merit Medical Systems. It trades about 0.12 of its total potential returns per unit of risk. Merit Medical Systems is currently generating about 0.25 per unit of volatility. If you would invest 9,590 in Merit Medical Systems on August 30, 2024 and sell it today you would earn a total of 776.00 from holding Merit Medical Systems or generate 8.09% 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. Merit Medical Systems
Performance |
| Timeline |
| Monster Beverage Corp |
| Merit Medical Systems |
Monster Beverage and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Merit Medical
The main advantage of trading using opposite Monster Beverage and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical'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 |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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