Correlation Between Weiss Korea and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Weiss Korea 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 Weiss Korea and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weiss Korea Opportunity and Monster Beverage Corp, you can compare the effects of market volatilities on Weiss Korea 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 Weiss Korea with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weiss Korea and Monster Beverage.
Diversification Opportunities for Weiss Korea and Monster Beverage
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Weiss and Monster is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Weiss Korea Opportunity 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 Weiss Korea 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 Weiss Korea Opportunity 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 Weiss Korea i.e., Weiss Korea and Monster Beverage go up and down completely randomly.
Pair Corralation between Weiss Korea and Monster Beverage
Assuming the 90 days trading horizon Weiss Korea Opportunity is expected to generate 5.62 times more return on investment than Monster Beverage. However, Weiss Korea is 5.62 times more volatile than Monster Beverage Corp. It trades about 0.22 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about -0.26 per unit of risk. If you would invest 13,700 in Weiss Korea Opportunity on October 23, 2024 and sell it today you would earn a total of 2,629 from holding Weiss Korea Opportunity or generate 19.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Weiss Korea Opportunity vs. Monster Beverage Corp
Performance |
| Timeline |
| Weiss Korea Opportunity |
| Monster Beverage Corp |
Weiss Korea and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weiss Korea and Monster Beverage
The main advantage of trading using opposite Weiss Korea and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weiss Korea 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.| Weiss Korea vs. Associated British Foods | Weiss Korea vs. Blackstone Loan Financing | Weiss Korea vs. Capital Drilling | Weiss Korea vs. Leroy Seafood Group |
| Monster Beverage vs. Home Depot | Monster Beverage vs. Weiss Korea Opportunity | Monster Beverage vs. River and Mercantile | Monster Beverage vs. Chrysalis Investments |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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