Correlation Between Empire Metals and Monster Beverage

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

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

Diversification Opportunities for Empire Metals and Monster Beverage

-0.64

Correlation Coefficient

Empire Metals  Monster Beverage

Excellent diversification

The 3 months correlation between Empire and Monster is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited 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 Empire Metals 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 Empire Metals Limited 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 Empire Metals i.e., Empire Metals and Monster Beverage go up and down completely randomly.

Pair Corralation between Empire Metals and Monster Beverage

Assuming the 90 days trading horizon Empire Metals Limited is expected to generate 2.33 times more return on investment than Monster Beverage. However, Empire Metals is 2.33 times more volatile than Monster Beverage Corp. It trades about 0.12 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about -0.05 per unit of risk. If you would invest  630.00  in Empire Metals Limited on October 6, 2024 and sell it today you would earn a total of  95.00  from holding Empire Metals Limited or generate 15.08% return on investment over 90 days.

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

Empire Metals Limited  vs.  Monster Beverage Corp

Empire Metals Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Empire Metals Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Empire Metals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Monster Beverage Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Monster Beverage may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Empire Metals and Monster Beverage

The main advantage of trading using opposite Empire Metals and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Metals 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 Empire Metals Limited 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.