Correlation Between Monster Beverage and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Cogent Communications 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 Cogent Communications 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 Cogent Communications Holdings, you can compare the effects of market volatilities on Monster Beverage and Cogent Communications 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 Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Cogent Communications.
Diversification Opportunities for Monster Beverage and Cogent Communications
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Monster and Cogent is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications 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 Cogent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogent Communications has no effect on the direction of Monster Beverage i.e., Monster Beverage and Cogent Communications go up and down completely randomly.
Pair Corralation between Monster Beverage and Cogent Communications
Assuming the 90 days trading horizon Monster Beverage is expected to generate 1.22 times less return on investment than Cogent Communications. But when comparing it to its historical volatility, Monster Beverage Corp is 1.05 times less risky than Cogent Communications. It trades about 0.12 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 7,100 in Cogent Communications Holdings on November 28, 2024 and sell it today you would earn a total of 400.00 from holding Cogent Communications Holdings or generate 5.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Cogent Communications Holdings
Performance |
| Timeline |
| Monster Beverage Corp |
| Cogent Communications |
Monster Beverage and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Cogent Communications
The main advantage of trading using opposite Monster Beverage and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Cogent Communications 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 Cogent Communications will offset losses from the drop in Cogent Communications' long position.| Monster Beverage vs. Rocket Internet SE | Monster Beverage vs. Phibro Animal Health | Monster Beverage vs. CARDINAL HEALTH | Monster Beverage vs. National Health Investors |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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