Correlation Between Monster Beverage and EHEALTH
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and EHEALTH 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 EHEALTH 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 EHEALTH, you can compare the effects of market volatilities on Monster Beverage and EHEALTH 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 EHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and EHEALTH.
Diversification Opportunities for Monster Beverage and EHEALTH
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Monster and EHEALTH is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and EHEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EHEALTH 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 EHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EHEALTH has no effect on the direction of Monster Beverage i.e., Monster Beverage and EHEALTH go up and down completely randomly.
Pair Corralation between Monster Beverage and EHEALTH
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 0.41 times more return on investment than EHEALTH. However, Monster Beverage Corp is 2.42 times less risky than EHEALTH. It trades about 0.05 of its potential returns per unit of risk. EHEALTH is currently generating about 0.01 per unit of risk. If you would invest 4,792 in Monster Beverage Corp on September 1, 2024 and sell it today you would earn a total of 443.00 from holding Monster Beverage Corp or generate 9.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. EHEALTH
Performance |
| Timeline |
| Monster Beverage Corp |
| EHEALTH |
Monster Beverage and EHEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and EHEALTH
The main advantage of trading using opposite Monster Beverage and EHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, EHEALTH 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 EHEALTH will offset losses from the drop in EHEALTH'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 |
| EHEALTH vs. SIVERS SEMICONDUCTORS AB | EHEALTH vs. Darden Restaurants | EHEALTH vs. Reliance Steel Aluminum | EHEALTH vs. Q2M Managementberatung AG |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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