Correlation Between Monster Beverage and Tanger Factory
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Tanger Factory 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 Tanger Factory 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 Tanger Factory Outlet, you can compare the effects of market volatilities on Monster Beverage and Tanger Factory 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 Tanger Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Tanger Factory.
Diversification Opportunities for Monster Beverage and Tanger Factory
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Monster and Tanger is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Tanger Factory Outlet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tanger Factory Outlet 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 Tanger Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tanger Factory Outlet has no effect on the direction of Monster Beverage i.e., Monster Beverage and Tanger Factory go up and down completely randomly.
Pair Corralation between Monster Beverage and Tanger Factory
Assuming the 90 days trading horizon Monster Beverage is expected to generate 3.26 times less return on investment than Tanger Factory. In addition to that, Monster Beverage is 1.17 times more volatile than Tanger Factory Outlet. It trades about 0.05 of its total potential returns per unit of risk. Tanger Factory Outlet is currently generating about 0.18 per unit of volatility. If you would invest 2,469 in Tanger Factory Outlet on September 1, 2024 and sell it today you would earn a total of 1,014 from holding Tanger Factory Outlet or generate 41.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.24% |
| Values | Daily Returns |
Monster Beverage Corp vs. Tanger Factory Outlet
Performance |
| Timeline |
| Monster Beverage Corp |
| Tanger Factory Outlet |
Monster Beverage and Tanger Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Tanger Factory
The main advantage of trading using opposite Monster Beverage and Tanger Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Tanger Factory 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 Tanger Factory will offset losses from the drop in Tanger Factory's long position.| Monster Beverage vs. SIVERS SEMICONDUCTORS AB | Monster Beverage vs. Darden Restaurants | Monster Beverage vs. Reliance Steel Aluminum | Monster Beverage vs. Q2M Managementberatung AG |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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