Correlation Between Monster Beverage and RCS MediaGroup
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and RCS MediaGroup 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 RCS MediaGroup 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 RCS MediaGroup SpA, you can compare the effects of market volatilities on Monster Beverage and RCS MediaGroup 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 RCS MediaGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and RCS MediaGroup.
Diversification Opportunities for Monster Beverage and RCS MediaGroup
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and RCS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and RCS MediaGroup SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCS MediaGroup SpA 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 RCS MediaGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCS MediaGroup SpA has no effect on the direction of Monster Beverage i.e., Monster Beverage and RCS MediaGroup go up and down completely randomly.
Pair Corralation between Monster Beverage and RCS MediaGroup
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 1.31 times more return on investment than RCS MediaGroup. However, Monster Beverage is 1.31 times more volatile than RCS MediaGroup SpA. It trades about 0.18 of its potential returns per unit of risk. RCS MediaGroup SpA is currently generating about 0.15 per unit of risk. If you would invest 4,864 in Monster Beverage Corp on September 1, 2024 and sell it today you would earn a total of 371.00 from holding Monster Beverage Corp or generate 7.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Monster Beverage Corp vs. RCS MediaGroup SpA
Performance |
| Timeline |
| Monster Beverage Corp |
| RCS MediaGroup SpA |
Monster Beverage and RCS MediaGroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and RCS MediaGroup
The main advantage of trading using opposite Monster Beverage and RCS MediaGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, RCS MediaGroup 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 RCS MediaGroup will offset losses from the drop in RCS MediaGroup's long position.| Monster Beverage vs. SIVERS SEMICONDUCTORS AB | Monster Beverage vs. Darden Restaurants | Monster Beverage vs. Reliance Steel Aluminum | Monster Beverage vs. Q2M Managementberatung AG |
| RCS MediaGroup vs. Luckin Coffee | RCS MediaGroup vs. Summit Hotel Properties | RCS MediaGroup vs. ZURICH INSURANCE GROUP | RCS MediaGroup vs. Hyatt Hotels |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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