Correlation Between Monster Beverage and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Methode Electronics 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 Methode Electronics 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 Methode Electronics, you can compare the effects of market volatilities on Monster Beverage and Methode Electronics 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 Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Methode Electronics.
Diversification Opportunities for Monster Beverage and Methode Electronics
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Monster and Methode is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics 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 Methode Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methode Electronics has no effect on the direction of Monster Beverage i.e., Monster Beverage and Methode Electronics go up and down completely randomly.
Pair Corralation between Monster Beverage and Methode Electronics
Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 0.36 times more return on investment than Methode Electronics. However, Monster Beverage Corp is 2.79 times less risky than Methode Electronics. It trades about 0.01 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.07 per unit of risk. If you would invest 5,287 in Monster Beverage Corp on August 31, 2024 and sell it today you would lose (52.00) from holding Monster Beverage Corp or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Monster Beverage Corp vs. Methode Electronics
Performance |
| Timeline |
| Monster Beverage Corp |
| Methode Electronics |
Monster Beverage and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Methode Electronics
The main advantage of trading using opposite Monster Beverage and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Methode Electronics 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 Methode Electronics will offset losses from the drop in Methode Electronics' 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 |
| Methode Electronics vs. Hochschild Mining plc | Methode Electronics vs. OURGAME INTHOLDL 00005 | Methode Electronics vs. MagnaChip Semiconductor Corp | Methode Electronics vs. CI GAMES SA |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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