Correlation Between Monster Beverage and Weibo Corp
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Weibo Corp 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 Weibo Corp 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 Weibo Corp, you can compare the effects of market volatilities on Monster Beverage and Weibo Corp 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 Weibo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Weibo Corp.
Diversification Opportunities for Monster Beverage and Weibo Corp
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Monster and Weibo is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp 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 Weibo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weibo Corp has no effect on the direction of Monster Beverage i.e., Monster Beverage and Weibo Corp go up and down completely randomly.
Pair Corralation between Monster Beverage and Weibo Corp
Given the investment horizon of 90 days Monster Beverage Corp is expected to generate 0.47 times more return on investment than Weibo Corp. However, Monster Beverage Corp is 2.13 times less risky than Weibo Corp. It trades about 0.0 of its potential returns per unit of risk. Weibo Corp is currently generating about -0.01 per unit of risk. If you would invest 5,753 in Monster Beverage Corp on August 31, 2024 and sell it today you would lose (240.00) from holding Monster Beverage Corp or give up 4.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Weibo Corp
Performance |
| Timeline |
| Monster Beverage Corp |
| Weibo Corp |
Monster Beverage and Weibo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Weibo Corp
The main advantage of trading using opposite Monster Beverage and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Weibo Corp 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 Weibo Corp will offset losses from the drop in Weibo Corp'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 |
| Weibo Corp vs. YY Inc Class | Weibo Corp vs. DouYu International Holdings | Weibo Corp vs. Tencent Music Entertainment | Weibo Corp vs. Autohome |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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