Correlation Between Monster Beverage and Media
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Media 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 Media 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 Media and Games, you can compare the effects of market volatilities on Monster Beverage and Media 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 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Media.
Diversification Opportunities for Monster Beverage and Media
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Monster and Media is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Media and Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media and Games 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 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media and Games has no effect on the direction of Monster Beverage i.e., Monster Beverage and Media go up and down completely randomly.
Pair Corralation between Monster Beverage and Media
Assuming the 90 days trading horizon Monster Beverage is expected to generate 7.2 times less return on investment than Media. But when comparing it to its historical volatility, Monster Beverage Corp is 2.62 times less risky than Media. It trades about 0.02 of its potential returns per unit of risk. Media and Games is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 178.00 in Media and Games on August 31, 2024 and sell it today you would earn a total of 163.00 from holding Media and Games or generate 91.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Monster Beverage Corp vs. Media and Games
Performance |
| Timeline |
| Monster Beverage Corp |
| Media and Games |
Monster Beverage and Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Media
The main advantage of trading using opposite Monster Beverage and Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Media 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 Media will offset losses from the drop in Media's long position.| Monster Beverage vs. Tianjin Capital Environmental | Monster Beverage vs. Perma Fix Environmental Services | Monster Beverage vs. Warner Music Group | Monster Beverage vs. Zoom Video Communications |
| Media vs. INFORMATION SVC GRP | Media vs. Bausch Health Companies | Media vs. National Health Investors | Media vs. Automatic Data Processing |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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