Correlation Between Monster Beverage and Materialise
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Materialise 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 Materialise 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 Materialise NV, you can compare the effects of market volatilities on Monster Beverage and Materialise 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 Materialise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Materialise.
Diversification Opportunities for Monster Beverage and Materialise
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Monster and Materialise is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV 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 Materialise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materialise NV has no effect on the direction of Monster Beverage i.e., Monster Beverage and Materialise go up and down completely randomly.
Pair Corralation between Monster Beverage and Materialise
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 0.22 times more return on investment than Materialise. However, Monster Beverage Corp is 4.64 times less risky than Materialise. It trades about 0.12 of its potential returns per unit of risk. Materialise NV is currently generating about -0.15 per unit of risk. If you would invest 4,724 in Monster Beverage Corp on November 28, 2024 and sell it today you would earn a total of 215.00 from holding Monster Beverage Corp or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Materialise NV
Performance |
| Timeline |
| Monster Beverage Corp |
| Materialise NV |
Monster Beverage and Materialise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Materialise
The main advantage of trading using opposite Monster Beverage and Materialise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Materialise 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 Materialise will offset losses from the drop in Materialise's long position.| Monster Beverage vs. Rocket Internet SE | Monster Beverage vs. Phibro Animal Health | Monster Beverage vs. CARDINAL HEALTH | Monster Beverage vs. National Health Investors |
| Materialise vs. Semiconductor Manufacturing International | Materialise vs. SCANSOURCE | Materialise vs. Thai Beverage Public | Materialise vs. China Resources Beer |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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