Correlation Between Monster Beverage and Metro AG
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Metro AG 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 Metro AG 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 Metro AG, you can compare the effects of market volatilities on Monster Beverage and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Metro AG.
Diversification Opportunities for Monster Beverage and Metro AG
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Monster and Metro is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of Monster Beverage i.e., Monster Beverage and Metro AG go up and down completely randomly.
Pair Corralation between Monster Beverage and Metro AG
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 0.75 times more return on investment than Metro AG. However, Monster Beverage Corp is 1.33 times less risky than Metro AG. It trades about 0.01 of its potential returns per unit of risk. Metro AG is currently generating about -0.07 per unit of risk. If you would invest 4,783 in Monster Beverage Corp on September 26, 2024 and sell it today you would earn a total of 173.00 from holding Monster Beverage Corp or generate 3.62% 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. Metro AG
Performance |
| Timeline |
| Monster Beverage Corp |
| Metro AG |
Monster Beverage and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Metro AG
The main advantage of trading using opposite Monster Beverage and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Microsoft | Monster Beverage vs. Microsoft |
| Metro AG vs. SBI Insurance Group | Metro AG vs. BE Semiconductor Industries | Metro AG vs. Monster Beverage Corp | Metro AG vs. Direct Line Insurance |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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