Correlation Between Monster Beverage and WINMARK
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and WINMARK 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 WINMARK 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 WINMARK, you can compare the effects of market volatilities on Monster Beverage and WINMARK 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 WINMARK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and WINMARK.
Diversification Opportunities for Monster Beverage and WINMARK
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and WINMARK is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and WINMARK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WINMARK 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 WINMARK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WINMARK has no effect on the direction of Monster Beverage i.e., Monster Beverage and WINMARK go up and down completely randomly.
Pair Corralation between Monster Beverage and WINMARK
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 0.8 times more return on investment than WINMARK. However, Monster Beverage Corp is 1.25 times less risky than WINMARK. It trades about 0.0 of its potential returns per unit of risk. WINMARK is currently generating about 0.0 per unit of risk. If you would invest 5,076 in Monster Beverage Corp on October 11, 2024 and sell it today you would lose (108.00) from holding Monster Beverage Corp or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. WINMARK
Performance |
| Timeline |
| Monster Beverage Corp |
| WINMARK |
Monster Beverage and WINMARK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and WINMARK
The main advantage of trading using opposite Monster Beverage and WINMARK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, WINMARK 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 WINMARK will offset losses from the drop in WINMARK's long position.| Monster Beverage vs. DICKS Sporting Goods | Monster Beverage vs. Darden Restaurants | Monster Beverage vs. SPORTING | Monster Beverage vs. Tower One Wireless |
| WINMARK vs. Suntory Beverage Food | WINMARK vs. Air Transport Services | WINMARK vs. Monster Beverage Corp | WINMARK vs. TEXAS ROADHOUSE |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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