Correlation Between Monster Beverage and ScanSource
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and ScanSource 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 ScanSource 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 ScanSource, you can compare the effects of market volatilities on Monster Beverage and ScanSource 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 ScanSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and ScanSource.
Diversification Opportunities for Monster Beverage and ScanSource
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Monster and ScanSource is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource 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 ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of Monster Beverage i.e., Monster Beverage and ScanSource go up and down completely randomly.
Pair Corralation between Monster Beverage and ScanSource
Assuming the 90 days trading horizon Monster Beverage is expected to generate 16.82 times less return on investment than ScanSource. But when comparing it to its historical volatility, Monster Beverage Corp is 1.39 times less risky than ScanSource. It trades about 0.01 of its potential returns per unit of risk. ScanSource is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,880 in ScanSource on August 31, 2024 and sell it today you would earn a total of 1,860 from holding ScanSource or generate 64.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Monster Beverage Corp vs. ScanSource
Performance |
| Timeline |
| Monster Beverage Corp |
| ScanSource |
Monster Beverage and ScanSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and ScanSource
The main advantage of trading using opposite Monster Beverage and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, ScanSource 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 ScanSource will offset losses from the drop in ScanSource's 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 |
| ScanSource vs. Boyd Gaming | ScanSource vs. NXP Semiconductors NV | ScanSource vs. Media and Games | ScanSource vs. ANGLER GAMING PLC |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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