Correlation Between Monster Beverage and Safety Shot
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Safety Shot 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 Safety Shot 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 Safety Shot, you can compare the effects of market volatilities on Monster Beverage and Safety Shot 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 Safety Shot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Safety Shot.
Diversification Opportunities for Monster Beverage and Safety Shot
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Monster and Safety is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot 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 Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of Monster Beverage i.e., Monster Beverage and Safety Shot go up and down completely randomly.
Pair Corralation between Monster Beverage and Safety Shot
Given the investment horizon of 90 days Monster Beverage is expected to generate 20.02 times less return on investment than Safety Shot. But when comparing it to its historical volatility, Monster Beverage Corp is 5.49 times less risky than Safety Shot. It trades about 0.01 of its potential returns per unit of risk. Safety Shot is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 87.00 in Safety Shot on September 25, 2024 and sell it today you would lose (13.00) from holding Safety Shot or give up 14.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Safety Shot
Performance |
| Timeline |
| Monster Beverage Corp |
| Safety Shot |
Monster Beverage and Safety Shot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Safety Shot
The main advantage of trading using opposite Monster Beverage and Safety Shot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Safety Shot 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 Safety Shot will offset losses from the drop in Safety Shot'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 |
| Safety Shot vs. NuRAN Wireless | Safety Shot vs. Weibo Corp | Safety Shot vs. Sea | Safety Shot vs. Tradeweb Markets |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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