Correlation Between Monster Beverage and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Playa Hotels 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 Playa Hotels 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 Playa Hotels Resorts, you can compare the effects of market volatilities on Monster Beverage and Playa Hotels 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 Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Playa Hotels.
Diversification Opportunities for Monster Beverage and Playa Hotels
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and Playa is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Playa Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playa Hotels Resorts 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 Playa Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playa Hotels Resorts has no effect on the direction of Monster Beverage i.e., Monster Beverage and Playa Hotels go up and down completely randomly.
Pair Corralation between Monster Beverage and Playa Hotels
Assuming the 90 days trading horizon Monster Beverage is expected to generate 1.77 times less return on investment than Playa Hotels. But when comparing it to its historical volatility, Monster Beverage Corp is 1.6 times less risky than Playa Hotels. It trades about 0.18 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 805.00 in Playa Hotels Resorts on August 30, 2024 and sell it today you would earn a total of 110.00 from holding Playa Hotels Resorts or generate 13.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Playa Hotels Resorts
Performance |
| Timeline |
| Monster Beverage Corp |
| Playa Hotels Resorts |
Monster Beverage and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Playa Hotels
The main advantage of trading using opposite Monster Beverage and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Playa Hotels 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 Playa Hotels will offset losses from the drop in Playa Hotels' long position.| Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Superior Plus Corp | Monster Beverage vs. SIVERS SEMICONDUCTORS AB |
| Playa Hotels vs. ARDAGH METAL PACDL 0001 | Playa Hotels vs. FIREWEED METALS P | Playa Hotels vs. SERI INDUSTRIAL EO | Playa Hotels vs. INSURANCE AUST GRP |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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