Correlation Between MGIC Investment and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Monster Beverage 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 MGIC Investment and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC Investment Corp and Monster Beverage Corp, you can compare the effects of market volatilities on MGIC Investment and Monster Beverage 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 MGIC Investment with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Monster Beverage.
Diversification Opportunities for MGIC Investment and Monster Beverage
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MGIC and Monster is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Monster Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage Corp and MGIC Investment 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 MGIC Investment Corp are associated (or correlated) with Monster Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monster Beverage Corp has no effect on the direction of MGIC Investment i.e., MGIC Investment and Monster Beverage go up and down completely randomly.
Pair Corralation between MGIC Investment and Monster Beverage
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 0.96 times more return on investment than Monster Beverage. However, MGIC Investment Corp is 1.04 times less risky than Monster Beverage. It trades about 0.14 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.12 per unit of risk. If you would invest 2,491 in MGIC Investment Corp on September 1, 2024 and sell it today you would earn a total of 135.00 from holding MGIC Investment Corp or generate 5.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. Monster Beverage Corp
Performance |
| Timeline |
| MGIC Investment Corp |
| Monster Beverage Corp |
MGIC Investment and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Monster Beverage
The main advantage of trading using opposite MGIC Investment and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Monster Beverage 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 Monster Beverage will offset losses from the drop in Monster Beverage's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty | MGIC Investment vs. Employers Holdings |
| Monster Beverage vs. Vita Coco | Monster Beverage vs. Coca Cola Femsa SAB | Monster Beverage vs. Embotelladora Andina SA | Monster Beverage vs. National 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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