Correlation Between ROK Resources and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both ROK Resources 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 ROK Resources and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ROK Resources and Monster Beverage Corp, you can compare the effects of market volatilities on ROK Resources 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 ROK Resources with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of ROK Resources and Monster Beverage.
Diversification Opportunities for ROK Resources and Monster Beverage
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ROK and Monster is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding ROK Resources 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 ROK Resources 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 ROK Resources 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 ROK Resources i.e., ROK Resources and Monster Beverage go up and down completely randomly.
Pair Corralation between ROK Resources and Monster Beverage
Assuming the 90 days horizon ROK Resources is expected to generate 2.13 times less return on investment than Monster Beverage. In addition to that, ROK Resources is 2.56 times more volatile than Monster Beverage Corp. It trades about 0.02 of its total potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.13 per unit of volatility. If you would invest 5,230 in Monster Beverage Corp on September 2, 2024 and sell it today you would earn a total of 283.00 from holding Monster Beverage Corp or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ROK Resources vs. Monster Beverage Corp
Performance |
| Timeline |
| ROK Resources |
| Monster Beverage Corp |
ROK Resources and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ROK Resources and Monster Beverage
The main advantage of trading using opposite ROK Resources and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ROK Resources 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.| ROK Resources vs. Micron Technology | ROK Resources vs. Globalfoundries | ROK Resources vs. MACOM Technology Solutions | ROK Resources vs. ASE Industrial Holding |
| Monster Beverage vs. Vita Coco | Monster Beverage vs. PepsiCo | Monster Beverage vs. The Coca Cola | Monster Beverage vs. Coca Cola Femsa SAB |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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