Correlation Between Monster Beverage and Vera Bradley
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Vera Bradley 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 Vera Bradley 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 Vera Bradley, you can compare the effects of market volatilities on Monster Beverage and Vera Bradley 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 Vera Bradley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Vera Bradley.
Diversification Opportunities for Monster Beverage and Vera Bradley
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Monster and Vera is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Vera Bradley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vera Bradley 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 Vera Bradley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vera Bradley has no effect on the direction of Monster Beverage i.e., Monster Beverage and Vera Bradley go up and down completely randomly.
Pair Corralation between Monster Beverage and Vera Bradley
Given the investment horizon of 90 days Monster Beverage is expected to generate 1.31 times less return on investment than Vera Bradley. But when comparing it to its historical volatility, Monster Beverage Corp is 1.13 times less risky than Vera Bradley. It trades about 0.09 of its potential returns per unit of risk. Vera Bradley is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 533.00 in Vera Bradley on August 28, 2024 and sell it today you would earn a total of 25.00 from holding Vera Bradley or generate 4.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Vera Bradley
Performance |
| Timeline |
| Monster Beverage Corp |
| Vera Bradley |
Monster Beverage and Vera Bradley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Vera Bradley
The main advantage of trading using opposite Monster Beverage and Vera Bradley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Vera Bradley 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 Vera Bradley will offset losses from the drop in Vera Bradley'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 |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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