Correlation Between Monster Beverage and Sealed Air
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Sealed 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 Sealed 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 Sealed Air, you can compare the effects of market volatilities on Monster Beverage and Sealed 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 Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Sealed Air.
Diversification Opportunities for Monster Beverage and Sealed Air
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and Sealed is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Sealed Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air 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 Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air has no effect on the direction of Monster Beverage i.e., Monster Beverage and Sealed Air go up and down completely randomly.
Pair Corralation between Monster Beverage and Sealed Air
Given the investment horizon of 90 days Monster Beverage Corp is expected to generate 0.69 times more return on investment than Sealed Air. However, Monster Beverage Corp is 1.46 times less risky than Sealed Air. It trades about 0.02 of its potential returns per unit of risk. Sealed Air is currently generating about -0.02 per unit of risk. If you would invest 5,062 in Monster Beverage Corp on August 28, 2024 and sell it today you would earn a total of 436.00 from holding Monster Beverage Corp or generate 8.61% 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. Sealed Air
Performance |
| Timeline |
| Monster Beverage Corp |
| Sealed Air |
Monster Beverage and Sealed Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Sealed Air
The main advantage of trading using opposite Monster Beverage and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Sealed 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 Sealed Air will offset losses from the drop in Sealed 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 |
| Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products | Sealed Air vs. Reynolds Consumer Products | Sealed Air vs. Ball Corporation |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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