Correlation Between Monster Beverage and SENECA FOODS-A
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and SENECA FOODS-A 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 SENECA FOODS-A 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 SENECA FOODS A, you can compare the effects of market volatilities on Monster Beverage and SENECA FOODS-A 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 SENECA FOODS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and SENECA FOODS-A.
Diversification Opportunities for Monster Beverage and SENECA FOODS-A
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and SENECA is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and SENECA FOODS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SENECA FOODS A 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 SENECA FOODS-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SENECA FOODS A has no effect on the direction of Monster Beverage i.e., Monster Beverage and SENECA FOODS-A go up and down completely randomly.
Pair Corralation between Monster Beverage and SENECA FOODS-A
Assuming the 90 days trading horizon Monster Beverage Corp is expected to under-perform the SENECA FOODS-A. But the stock apears to be less risky and, when comparing its historical volatility, Monster Beverage Corp is 1.36 times less risky than SENECA FOODS-A. The stock trades about -0.01 of its potential returns per unit of risk. The SENECA FOODS A is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,420 in SENECA FOODS A on August 27, 2024 and sell it today you would earn a total of 2,230 from holding SENECA FOODS A or generate 50.45% 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. SENECA FOODS A
Performance |
| Timeline |
| Monster Beverage Corp |
| SENECA FOODS A |
Monster Beverage and SENECA FOODS-A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and SENECA FOODS-A
The main advantage of trading using opposite Monster Beverage and SENECA FOODS-A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, SENECA FOODS-A 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 SENECA FOODS-A will offset losses from the drop in SENECA FOODS-A's long position.| Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Microsoft |
| SENECA FOODS-A vs. Apple Inc | SENECA FOODS-A vs. Apple Inc | SENECA FOODS-A vs. Apple Inc | SENECA FOODS-A vs. Microsoft |
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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