Correlation Between Monster Beverage and THRACE PLASTICS
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and THRACE PLASTICS 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 THRACE PLASTICS 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 THRACE PLASTICS, you can compare the effects of market volatilities on Monster Beverage and THRACE PLASTICS 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 THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and THRACE PLASTICS.
Diversification Opportunities for Monster Beverage and THRACE PLASTICS
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Monster and THRACE is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS 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 THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of Monster Beverage i.e., Monster Beverage and THRACE PLASTICS go up and down completely randomly.
Pair Corralation between Monster Beverage and THRACE PLASTICS
Assuming the 90 days trading horizon Monster Beverage is expected to generate 1.95 times less return on investment than THRACE PLASTICS. In addition to that, Monster Beverage is 1.35 times more volatile than THRACE PLASTICS. It trades about 0.1 of its total potential returns per unit of risk. THRACE PLASTICS is currently generating about 0.26 per unit of volatility. If you would invest 364.00 in THRACE PLASTICS on September 4, 2024 and sell it today you would earn a total of 32.00 from holding THRACE PLASTICS or generate 8.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. THRACE PLASTICS
Performance |
| Timeline |
| Monster Beverage Corp |
| THRACE PLASTICS |
Monster Beverage and THRACE PLASTICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and THRACE PLASTICS
The main advantage of trading using opposite Monster Beverage and THRACE PLASTICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, THRACE PLASTICS 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 THRACE PLASTICS will offset losses from the drop in THRACE PLASTICS's long position.| Monster Beverage vs. BRIT AMER TOBACCO | Monster Beverage vs. Japan Tobacco | Monster Beverage vs. Microchip Technology Incorporated | Monster Beverage vs. AECOM TECHNOLOGY |
| THRACE PLASTICS vs. BOSTON BEER A | THRACE PLASTICS vs. TYSON FOODS A | THRACE PLASTICS vs. PT Indofood Sukses | THRACE PLASTICS vs. Monster Beverage Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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