Correlation Between Vale SA and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Vale SA 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 Vale SA and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale SA and Monster Beverage Corp, you can compare the effects of market volatilities on Vale SA 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 Vale SA with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and Monster Beverage.
Diversification Opportunities for Vale SA and Monster Beverage
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vale and Monster is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA 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 Vale SA 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 Vale SA 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 Vale SA i.e., Vale SA and Monster Beverage go up and down completely randomly.
Pair Corralation between Vale SA and Monster Beverage
Assuming the 90 days trading horizon Vale SA is expected to under-perform the Monster Beverage. In addition to that, Vale SA is 1.16 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 0.04 per unit of volatility. If you would invest 100,400 in Monster Beverage Corp on September 1, 2024 and sell it today you would earn a total of 13,100 from holding Monster Beverage Corp or generate 13.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.72% |
| Values | Daily Returns |
Vale SA vs. Monster Beverage Corp
Performance |
| Timeline |
| Vale SA |
| Monster Beverage Corp |
Vale SA and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale SA and Monster Beverage
The main advantage of trading using opposite Vale SA and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA 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.| Vale SA vs. Southern Copper | Vale SA vs. Southwest Airlines | Vale SA vs. United States Steel | Vale SA vs. McEwen Mining |
| Monster Beverage vs. The Select Sector | Monster Beverage vs. Promotora y Operadora | Monster Beverage vs. SPDR Series Trust | Monster Beverage vs. iShares Trust |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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