Correlation Between Monster Beverage and G III
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and G III 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 G III 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 G III Apparel Group, you can compare the effects of market volatilities on Monster Beverage and G III 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 G III. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and G III.
Diversification Opportunities for Monster Beverage and G III
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Monster and GI4 is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel 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 G III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of Monster Beverage i.e., Monster Beverage and G III go up and down completely randomly.
Pair Corralation between Monster Beverage and G III
Assuming the 90 days trading horizon Monster Beverage is expected to generate 10.61 times less return on investment than G III. But when comparing it to its historical volatility, Monster Beverage Corp is 2.12 times less risky than G III. It trades about 0.02 of its potential returns per unit of risk. G III Apparel Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,220 in G III Apparel Group on September 13, 2024 and sell it today you would earn a total of 2,060 from holding G III Apparel Group or generate 168.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. G III Apparel Group
Performance |
| Timeline |
| Monster Beverage Corp |
| G III Apparel |
Monster Beverage and G III Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and G III
The main advantage of trading using opposite Monster Beverage and G III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, G III 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 G III will offset losses from the drop in G III's long position.| Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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