Correlation Between Monster Beverage and Patterson Companies
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Patterson Companies 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 Patterson Companies 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 Patterson Companies, you can compare the effects of market volatilities on Monster Beverage and Patterson Companies 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 Patterson Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Patterson Companies.
Diversification Opportunities for Monster Beverage and Patterson Companies
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Monster and Patterson is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Patterson Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patterson Companies 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 Patterson Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patterson Companies has no effect on the direction of Monster Beverage i.e., Monster Beverage and Patterson Companies go up and down completely randomly.
Pair Corralation between Monster Beverage and Patterson Companies
Assuming the 90 days trading horizon Monster Beverage is expected to generate 3.23 times less return on investment than Patterson Companies. But when comparing it to its historical volatility, Monster Beverage Corp is 1.71 times less risky than Patterson Companies. It trades about 0.02 of its potential returns per unit of risk. Patterson Companies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,248 in Patterson Companies on December 4, 2024 and sell it today you would earn a total of 752.00 from holding Patterson Companies or generate 33.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Patterson Companies
Performance |
| Timeline |
| Monster Beverage Corp |
| Patterson Companies |
Monster Beverage and Patterson Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Patterson Companies
The main advantage of trading using opposite Monster Beverage and Patterson Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Patterson Companies 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 Patterson Companies will offset losses from the drop in Patterson Companies' long position.| Monster Beverage vs. Broadridge Financial Solutions | Monster Beverage vs. Gold Road Resources | Monster Beverage vs. KAUFMAN ET BROAD | Monster Beverage vs. Tokyu Construction Co |
| Patterson Companies vs. AmerisourceBergen | Patterson Companies vs. Cardinal Health | Patterson Companies vs. Henry Schein | Patterson Companies vs. Shanghai Pharmaceuticals Holding |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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