Correlation Between Monster Beverage and Eneraqua Technologies

Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Eneraqua Technologies 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 Eneraqua Technologies 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 Eneraqua Technologies PLC, you can compare the effects of market volatilities on Monster Beverage and Eneraqua Technologies 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 Eneraqua Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Eneraqua Technologies.

Diversification Opportunities for Monster Beverage and Eneraqua Technologies

0.64

Correlation Coefficient

Monster Beverage  Eneraqua Technologies

Poor diversification

The 3 months correlation between Monster and Eneraqua is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Eneraqua Technologies PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneraqua Technologies 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 Eneraqua Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneraqua Technologies PLC has no effect on the direction of Monster Beverage i.e., Monster Beverage and Eneraqua Technologies go up and down completely randomly.

Pair Corralation between Monster Beverage and Eneraqua Technologies

Assuming the 90 days trading horizon Monster Beverage Corp is expected to under-perform the Eneraqua Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Monster Beverage Corp is 2.2 times less risky than Eneraqua Technologies. The stock trades about -0.16 of its potential returns per unit of risk. The Eneraqua Technologies PLC is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4,000  in Eneraqua Technologies PLC on October 9, 2024 and sell it today you would earn a total of  180.00  from holding Eneraqua Technologies PLC or generate 4.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Monster Beverage Corp  vs.  Eneraqua Technologies PLC

Monster Beverage Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 4 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Eneraqua Technologies PLC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eneraqua Technologies PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Eneraqua Technologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monster Beverage and Eneraqua Technologies

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

The idea behind Monster Beverage Corp and Eneraqua Technologies 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.