Correlation Between Monster Beverage and AUTO TRADER
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and AUTO TRADER 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 AUTO TRADER 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 AUTO TRADER ADR, you can compare the effects of market volatilities on Monster Beverage and AUTO TRADER 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 AUTO TRADER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and AUTO TRADER.
Diversification Opportunities for Monster Beverage and AUTO TRADER
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Monster and AUTO is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and AUTO TRADER ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTO TRADER ADR 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 AUTO TRADER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTO TRADER ADR has no effect on the direction of Monster Beverage i.e., Monster Beverage and AUTO TRADER go up and down completely randomly.
Pair Corralation between Monster Beverage and AUTO TRADER
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 1.03 times more return on investment than AUTO TRADER. However, Monster Beverage is 1.03 times more volatile than AUTO TRADER ADR. It trades about 0.2 of its potential returns per unit of risk. AUTO TRADER ADR is currently generating about 0.03 per unit of risk. If you would invest 4,822 in Monster Beverage Corp on September 2, 2024 and sell it today you would earn a total of 413.00 from holding Monster Beverage Corp or generate 8.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. AUTO TRADER ADR
Performance |
| Timeline |
| Monster Beverage Corp |
| AUTO TRADER ADR |
Monster Beverage and AUTO TRADER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and AUTO TRADER
The main advantage of trading using opposite Monster Beverage and AUTO TRADER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, AUTO TRADER 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 AUTO TRADER will offset losses from the drop in AUTO TRADER's long position.| Monster Beverage vs. Southwest Airlines Co | Monster Beverage vs. American Airlines Group | Monster Beverage vs. Aegean Airlines SA | Monster Beverage vs. AEGEAN AIRLINES |
| AUTO TRADER vs. SERI INDUSTRIAL EO | AUTO TRADER vs. Evolution Mining Limited | AUTO TRADER vs. Corporate Travel Management | AUTO TRADER vs. ADRIATIC METALS LS 013355 |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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