Correlation Between Monster Beverage and United Utilities
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and United Utilities 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 United Utilities 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 United Utilities Group, you can compare the effects of market volatilities on Monster Beverage and United Utilities 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 United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and United Utilities.
Diversification Opportunities for Monster Beverage and United Utilities
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Monster and United is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities 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 United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of Monster Beverage i.e., Monster Beverage and United Utilities go up and down completely randomly.
Pair Corralation between Monster Beverage and United Utilities
Given the investment horizon of 90 days Monster Beverage Corp is expected to under-perform the United Utilities. In addition to that, Monster Beverage is 1.5 times more volatile than United Utilities Group. It trades about -0.03 of its total potential returns per unit of risk. United Utilities Group is currently generating about 0.0 per unit of volatility. If you would invest 1,401 in United Utilities Group on October 31, 2024 and sell it today you would lose (7.00) from holding United Utilities Group or give up 0.5% 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. United Utilities Group
Performance |
| Timeline |
| Monster Beverage Corp |
| United Utilities |
Monster Beverage and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and United Utilities
The main advantage of trading using opposite Monster Beverage and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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