Correlation Between Under Armour and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Under Armour 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 Under Armour and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Under Armour C and Monster Beverage Corp, you can compare the effects of market volatilities on Under Armour 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 Under Armour with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and Monster Beverage.
Diversification Opportunities for Under Armour and Monster Beverage
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Under and Monster is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C 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 Under Armour 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 Under Armour C 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 Under Armour i.e., Under Armour and Monster Beverage go up and down completely randomly.
Pair Corralation between Under Armour and Monster Beverage
Allowing for the 90-day total investment horizon Under Armour C is expected to generate 2.95 times more return on investment than Monster Beverage. However, Under Armour is 2.95 times more volatile than Monster Beverage Corp. It trades about 0.1 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.09 per unit of risk. If you would invest 806.00 in Under Armour C on August 28, 2024 and sell it today you would earn a total of 85.00 from holding Under Armour C or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Under Armour C vs. Monster Beverage Corp
Performance |
| Timeline |
| Under Armour C |
| Monster Beverage Corp |
Under Armour and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Under Armour and Monster Beverage
The main advantage of trading using opposite Under Armour and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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.| Under Armour vs. Levi Strauss Co | Under Armour vs. Columbia Sportswear | Under Armour vs. Hanesbrands | Under Armour vs. PVH Corp |
| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |