Correlation Between Monster Beverage and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and QBE Insurance 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 QBE Insurance 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 QBE Insurance Group, you can compare the effects of market volatilities on Monster Beverage and QBE Insurance 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 QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and QBE Insurance.
Diversification Opportunities for Monster Beverage and QBE Insurance
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Monster and QBE is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and QBE Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QBE Insurance 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 QBE Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QBE Insurance Group has no effect on the direction of Monster Beverage i.e., Monster Beverage and QBE Insurance go up and down completely randomly.
Pair Corralation between Monster Beverage and QBE Insurance
Given the investment horizon of 90 days Monster Beverage Corp is expected to generate 0.76 times more return on investment than QBE Insurance. However, Monster Beverage Corp is 1.31 times less risky than QBE Insurance. It trades about 0.02 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.0 per unit of risk. If you would invest 5,422 in Monster Beverage Corp on September 3, 2024 and sell it today you would earn a total of 91.00 from holding Monster Beverage Corp or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. QBE Insurance Group
Performance |
| Timeline |
| Monster Beverage Corp |
| QBE Insurance Group |
Monster Beverage and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and QBE Insurance
The main advantage of trading using opposite Monster Beverage and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, QBE Insurance 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 QBE Insurance will offset losses from the drop in QBE Insurance'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 |
| QBE Insurance vs. AmTrust Financial Services | QBE Insurance vs. AmTrust Financial Services | QBE Insurance vs. AmTrust Financial Services | QBE Insurance vs. AmTrust Financial Services |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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