Correlation Between Monster Beverage and ARISTOCRAT LEISURE
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE, you can compare the effects of market volatilities on Monster Beverage and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and ARISTOCRAT LEISURE.
Diversification Opportunities for Monster Beverage and ARISTOCRAT LEISURE
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Monster and ARISTOCRAT is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and ARISTOCRAT LEISURE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARISTOCRAT LEISURE has no effect on the direction of Monster Beverage i.e., Monster Beverage and ARISTOCRAT LEISURE go up and down completely randomly.
Pair Corralation between Monster Beverage and ARISTOCRAT LEISURE
Assuming the 90 days trading horizon Monster Beverage is expected to generate 1.58 times less return on investment than ARISTOCRAT LEISURE. In addition to that, Monster Beverage is 2.11 times more volatile than ARISTOCRAT LEISURE. It trades about 0.18 of its total potential returns per unit of risk. ARISTOCRAT LEISURE is currently generating about 0.59 per unit of volatility. If you would invest 3,680 in ARISTOCRAT LEISURE on August 30, 2024 and sell it today you would earn a total of 480.00 from holding ARISTOCRAT LEISURE or generate 13.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. ARISTOCRAT LEISURE
Performance |
| Timeline |
| Monster Beverage Corp |
| ARISTOCRAT LEISURE |
Monster Beverage and ARISTOCRAT LEISURE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and ARISTOCRAT LEISURE
The main advantage of trading using opposite Monster Beverage and ARISTOCRAT LEISURE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE will offset losses from the drop in ARISTOCRAT LEISURE's long position.| Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Superior Plus Corp | Monster Beverage vs. SIVERS SEMICONDUCTORS AB |
| ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Superior Plus Corp | ARISTOCRAT LEISURE vs. SIVERS SEMICONDUCTORS AB |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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