Correlation Between Monster Beverage and Arch Capital
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Arch Capital 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 Arch Capital 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 Arch Capital Group, you can compare the effects of market volatilities on Monster Beverage and Arch Capital 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 Arch Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Arch Capital.
Diversification Opportunities for Monster Beverage and Arch Capital
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Monster and Arch is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Arch Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arch Capital Group 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 Arch Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arch Capital Group has no effect on the direction of Monster Beverage i.e., Monster Beverage and Arch Capital go up and down completely randomly.
Pair Corralation between Monster Beverage and Arch Capital
Assuming the 90 days trading horizon Monster Beverage is expected to generate 3.6 times less return on investment than Arch Capital. But when comparing it to its historical volatility, Monster Beverage Corp is 1.08 times less risky than Arch Capital. It trades about 0.02 of its potential returns per unit of risk. Arch Capital Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7,004 in Arch Capital Group on August 29, 2024 and sell it today you would earn a total of 2,490 from holding Arch Capital Group or generate 35.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Arch Capital Group
Performance |
| Timeline |
| Monster Beverage Corp |
| Arch Capital Group |
Monster Beverage and Arch Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Arch Capital
The main advantage of trading using opposite Monster Beverage and Arch Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Arch Capital 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 Arch Capital will offset losses from the drop in Arch Capital's long position.| Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Superior Plus Corp | Monster Beverage vs. SIVERS SEMICONDUCTORS AB |
| Arch Capital vs. Park Hotels Resorts | Arch Capital vs. Consolidated Communications Holdings | Arch Capital vs. Pebblebrook Hotel Trust | Arch Capital vs. NH HOTEL GROUP |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Transaction History View history of all your transactions and understand their impact on performance |