Correlation Between Monster Beverage and Bloomsbury Publishing

Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Bloomsbury Publishing 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 Monster Beverage and Bloomsbury Publishing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Monster Beverage Corp and Bloomsbury Publishing Plc, you can compare the effects of market volatilities on Monster Beverage and Bloomsbury Publishing 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 Monster Beverage with a short position of Bloomsbury Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Bloomsbury Publishing.

Diversification Opportunities for Monster Beverage and Bloomsbury Publishing

0.22

Correlation Coefficient

Monster Beverage  Bloomsbury Publishing

Modest diversification

The 3 months correlation between Monster and Bloomsbury is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Bloomsbury Publishing Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomsbury Publishing Plc and Monster Beverage 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 Monster Beverage Corp are associated (or correlated) with Bloomsbury Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomsbury Publishing Plc has no effect on the direction of Monster Beverage i.e., Monster Beverage and Bloomsbury Publishing go up and down completely randomly.

Pair Corralation between Monster Beverage and Bloomsbury Publishing

Assuming the 90 days trading horizon Monster Beverage is expected to generate 1.66 times less return on investment than Bloomsbury Publishing. But when comparing it to its historical volatility, Monster Beverage Corp is 1.46 times less risky than Bloomsbury Publishing. It trades about 0.04 of its potential returns per unit of risk. Bloomsbury Publishing Plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  66,027  in Bloomsbury Publishing Plc on September 13, 2024 and sell it today you would earn a total of  3,773  from holding Bloomsbury Publishing Plc or generate 5.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Monster Beverage Corp  vs.  Bloomsbury Publishing Plc

Monster Beverage Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Monster Beverage is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Bloomsbury Publishing Plc

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bloomsbury Publishing Plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Bloomsbury Publishing may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Monster Beverage and Bloomsbury Publishing

The main advantage of trading using opposite Monster Beverage and Bloomsbury Publishing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Bloomsbury Publishing 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 Bloomsbury Publishing will offset losses from the drop in Bloomsbury Publishing's long position.

The idea behind Monster Beverage Corp and Bloomsbury Publishing Plc 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.