Correlation Between Safety Shot and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Safety Shot 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 Safety Shot and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safety Shot and Monster Beverage Corp, you can compare the effects of market volatilities on Safety Shot 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 Safety Shot with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Shot and Monster Beverage.
Diversification Opportunities for Safety Shot and Monster Beverage
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Safety and Monster is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Safety Shot 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 Safety Shot 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 Safety Shot 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 Safety Shot i.e., Safety Shot and Monster Beverage go up and down completely randomly.
Pair Corralation between Safety Shot and Monster Beverage
Assuming the 90 days horizon Safety Shot is expected to under-perform the Monster Beverage. In addition to that, Safety Shot is 8.71 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 0.08 per unit of volatility. If you would invest 5,217 in Monster Beverage Corp on August 30, 2024 and sell it today you would earn a total of 297.00 from holding Monster Beverage Corp or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
Safety Shot vs. Monster Beverage Corp
Performance |
| Timeline |
| Safety Shot |
| Monster Beverage Corp |
Safety Shot and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Shot and Monster Beverage
The main advantage of trading using opposite Safety Shot and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Shot 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.The idea behind Safety Shot and Monster Beverage Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Monster Beverage vs. Coca Cola Consolidated | Monster Beverage vs. Keurig Dr Pepper | Monster Beverage vs. PepsiCo | 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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