Correlation Between Monster Beverage and Cal Maine
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Cal Maine 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 Cal Maine 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 Cal Maine Foods, you can compare the effects of market volatilities on Monster Beverage and Cal Maine 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 Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Cal Maine.
Diversification Opportunities for Monster Beverage and Cal Maine
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Monster and Cal is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Cal Maine Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cal Maine Foods 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 Cal Maine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cal Maine Foods has no effect on the direction of Monster Beverage i.e., Monster Beverage and Cal Maine go up and down completely randomly.
Pair Corralation between Monster Beverage and Cal Maine
Assuming the 90 days trading horizon Monster Beverage Corp is expected to under-perform the Cal Maine. But the stock apears to be less risky and, when comparing its historical volatility, Monster Beverage Corp is 1.68 times less risky than Cal Maine. The stock trades about -0.13 of its potential returns per unit of risk. The Cal Maine Foods is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 8,353 in Cal Maine Foods on November 8, 2024 and sell it today you would earn a total of 2,027 from holding Cal Maine Foods or generate 24.27% 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. Cal Maine Foods
Performance |
| Timeline |
| Monster Beverage Corp |
| Cal Maine Foods |
Monster Beverage and Cal Maine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Cal Maine
The main advantage of trading using opposite Monster Beverage and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Cal Maine 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 Cal Maine will offset losses from the drop in Cal Maine's long position.| Monster Beverage vs. SIERRA METALS | Monster Beverage vs. Beta Systems Software | Monster Beverage vs. ADRIATIC METALS LS 013355 | Monster Beverage vs. Align Technology |
| Cal Maine vs. DAIDO METAL TD | Cal Maine vs. China Railway Construction | Cal Maine vs. Dairy Farm International | Cal Maine vs. SIERRA METALS |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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