Correlation Between Monster Beverage and Bank Of

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

By analyzing existing cross correlation between Monster Beverage and The Bank of, you can compare the effects of market volatilities on Monster Beverage and Bank Of 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 Bank Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Bank Of.

Diversification Opportunities for Monster Beverage and Bank Of

0.92

Correlation Coefficient

Monster Beverage  Bank Of

Almost no diversification

The 3 months correlation between Monster and Bank is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Bank 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 are associated (or correlated) with Bank Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Bank has no effect on the direction of Monster Beverage i.e., Monster Beverage and Bank Of go up and down completely randomly.

Pair Corralation between Monster Beverage and Bank Of

Assuming the 90 days trading horizon Monster Beverage is expected to generate 3.68 times less return on investment than Bank Of. In addition to that, Monster Beverage is 1.17 times more volatile than The Bank of. It trades about 0.04 of its total potential returns per unit of risk. The Bank of is currently generating about 0.17 per unit of volatility. If you would invest  21,138  in The Bank of on October 4, 2024 and sell it today you would earn a total of  26,661  from holding The Bank of or generate 126.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	96.78%
Values	Daily Returns

Monster Beverage  vs.  The Bank of

Monster Beverage

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Monster Beverage sustained solid returns over the last few months and may actually be approaching a breakup point.

The Bank

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Bank of are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Bank Of sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monster Beverage and Bank Of

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

The idea behind Monster Beverage and The Bank of 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.