Correlation Between Monster Beverage and Molson Coors
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Molson Coors 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 Molson Coors 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 Molson Coors Brewing, you can compare the effects of market volatilities on Monster Beverage and Molson Coors 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 Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Molson Coors.
Diversification Opportunities for Monster Beverage and Molson Coors
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and Molson is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Molson Coors Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Brewing 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Brewing has no effect on the direction of Monster Beverage i.e., Monster Beverage and Molson Coors go up and down completely randomly.
Pair Corralation between Monster Beverage and Molson Coors
Given the investment horizon of 90 days Monster Beverage is expected to generate 4.8 times less return on investment than Molson Coors. In addition to that, Monster Beverage is 1.22 times more volatile than Molson Coors Brewing. It trades about 0.04 of its total potential returns per unit of risk. Molson Coors Brewing is currently generating about 0.23 per unit of volatility. If you would invest 5,577 in Molson Coors Brewing on August 26, 2024 and sell it today you would earn a total of 459.00 from holding Molson Coors Brewing or generate 8.23% 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. Molson Coors Brewing
Performance |
| Timeline |
| Monster Beverage Corp |
| Molson Coors Brewing |
Monster Beverage and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Molson Coors
The main advantage of trading using opposite Monster Beverage and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Molson Coors 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 Molson Coors will offset losses from the drop in Molson Coors' 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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