Correlation Between Penn National and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Penn National 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 Penn National and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penn National Gaming and Monster Beverage Corp, you can compare the effects of market volatilities on Penn National 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 Penn National with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Monster Beverage.
Diversification Opportunities for Penn National and Monster Beverage
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Penn and Monster is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming 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 Penn National 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 Penn National Gaming 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 Penn National i.e., Penn National and Monster Beverage go up and down completely randomly.
Pair Corralation between Penn National and Monster Beverage
Assuming the 90 days horizon Penn National Gaming is expected to under-perform the Monster Beverage. In addition to that, Penn National is 2.26 times more volatile than Monster Beverage Corp. It trades about 0.0 of its total potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.02 per unit of volatility. If you would invest 4,783 in Monster Beverage Corp on August 31, 2024 and sell it today you would earn a total of 437.00 from holding Monster Beverage Corp or generate 9.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penn National Gaming vs. Monster Beverage Corp
Performance |
| Timeline |
| Penn National Gaming |
| Monster Beverage Corp |
Penn National and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Monster Beverage
The main advantage of trading using opposite Penn National and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National 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.| Penn National vs. Superior Plus Corp | Penn National vs. NMI Holdings | Penn National vs. Origin Agritech | Penn National vs. SIVERS SEMICONDUCTORS AB |
| 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 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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