Correlation Between Monster Beverage and Southwest Gas
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Southwest Gas 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 Southwest Gas 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 Southwest Gas Holdings, you can compare the effects of market volatilities on Monster Beverage and Southwest Gas 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 Southwest Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Southwest Gas.
Diversification Opportunities for Monster Beverage and Southwest Gas
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and Southwest is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Southwest Gas Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Gas Holdings 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 Southwest Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwest Gas Holdings has no effect on the direction of Monster Beverage i.e., Monster Beverage and Southwest Gas go up and down completely randomly.
Pair Corralation between Monster Beverage and Southwest Gas
Given the investment horizon of 90 days Monster Beverage Corp is expected to under-perform the Southwest Gas. In addition to that, Monster Beverage is 1.39 times more volatile than Southwest Gas Holdings. It trades about -0.19 of its total potential returns per unit of risk. Southwest Gas Holdings is currently generating about -0.11 per unit of volatility. If you would invest 7,602 in Southwest Gas Holdings on September 14, 2024 and sell it today you would lose (258.00) from holding Southwest Gas Holdings or give up 3.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Monster Beverage Corp vs. Southwest Gas Holdings
Performance |
| Timeline |
| Monster Beverage Corp |
| Southwest Gas Holdings |
Monster Beverage and Southwest Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Southwest Gas
The main advantage of trading using opposite Monster Beverage and Southwest Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Southwest Gas 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 Southwest Gas will offset losses from the drop in Southwest Gas' long position.| Monster Beverage vs. Coca Cola Femsa SAB | Monster Beverage vs. Keurig Dr Pepper | Monster Beverage vs. Embotelladora Andina SA | Monster Beverage vs. Coca Cola European Partners |
| Southwest Gas vs. NewJersey Resources | Southwest Gas vs. Northwest Natural Gas | Southwest Gas vs. NorthWestern | Southwest Gas vs. Chesapeake Utilities |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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