Correlation Between Monster Beverage and Biogen
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Biogen 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 Biogen 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 Biogen Inc, you can compare the effects of market volatilities on Monster Beverage and Biogen 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 Biogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Biogen.
Diversification Opportunities for Monster Beverage and Biogen
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Monster and Biogen is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc 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 Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of Monster Beverage i.e., Monster Beverage and Biogen go up and down completely randomly.
Pair Corralation between Monster Beverage and Biogen
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 1.21 times more return on investment than Biogen. However, Monster Beverage is 1.21 times more volatile than Biogen Inc. It trades about 0.14 of its potential returns per unit of risk. Biogen Inc is currently generating about -0.27 per unit of risk. If you would invest 4,905 in Monster Beverage Corp on August 29, 2024 and sell it today you would earn a total of 299.00 from holding Monster Beverage Corp or generate 6.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Biogen Inc
Performance |
| Timeline |
| Monster Beverage Corp |
| Biogen Inc |
Monster Beverage and Biogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Biogen
The main advantage of trading using opposite Monster Beverage and Biogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Biogen 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 Biogen will offset losses from the drop in Biogen's long position.| Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Superior Plus Corp | Monster Beverage vs. SIVERS SEMICONDUCTORS AB |
| Biogen vs. CEOTRONICS | Biogen vs. Coor Service Management | Biogen vs. AGF Management Limited | Biogen vs. Jupiter Fund Management |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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