Correlation Between ASHFORD HOSPITTRUST and Monster Beverage

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

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

Diversification Opportunities for ASHFORD HOSPITTRUST and Monster Beverage

-0.79

Correlation Coefficient

ASHFORD HOSPITTRUST  Monster Beverage

Pay attention - limited upside

The 3 months correlation between ASHFORD and Monster is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding ASHFORD HOSPITTRUST 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 ASHFORD HOSPITTRUST 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 ASHFORD HOSPITTRUST 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 ASHFORD HOSPITTRUST i.e., ASHFORD HOSPITTRUST and Monster Beverage go up and down completely randomly.

Pair Corralation between ASHFORD HOSPITTRUST and Monster Beverage

Assuming the 90 days horizon ASHFORD HOSPITTRUST is expected to under-perform the Monster Beverage. In addition to that, ASHFORD HOSPITTRUST is 1.17 times more volatile than Monster Beverage Corp. It trades about -0.19 of its total potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.15 per unit of volatility. If you would invest  4,585  in Monster Beverage Corp on September 4, 2024 and sell it today you would earn a total of  663.00  from holding Monster Beverage Corp or generate 14.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.67%
Values	Daily Returns

ASHFORD HOSPITTRUST  vs.  Monster Beverage Corp

ASHFORD HOSPITTRUST

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASHFORD HOSPITTRUST has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Monster Beverage Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Monster Beverage reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASHFORD HOSPITTRUST and Monster Beverage

The main advantage of trading using opposite ASHFORD HOSPITTRUST and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASHFORD HOSPITTRUST 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.

The idea behind ASHFORD HOSPITTRUST and Monster Beverage Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.