Correlation Between Monster Beverage and Global X

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

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

Diversification Opportunities for Monster Beverage and Global X

0.83

Correlation Coefficient

Monster Beverage  Global X

Very poor diversification

The 3 months correlation between Monster and Global is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Monster Beverage i.e., Monster Beverage and Global X go up and down completely randomly.

Pair Corralation between Monster Beverage and Global X

Assuming the 90 days trading horizon Monster Beverage is expected to generate 1.23 times more return on investment than Global X. However, Monster Beverage is 1.23 times more volatile than Global X Funds. It trades about 0.06 of its potential returns per unit of risk. Global X Funds is currently generating about 0.07 per unit of risk. If you would invest  3,330  in Monster Beverage on October 13, 2024 and sell it today you would earn a total of  482.00  from holding Monster Beverage or generate 14.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Monster Beverage  vs.  Global X Funds

Monster Beverage

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Monster Beverage may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Global X Funds

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Monster Beverage and Global X

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

The idea behind Monster Beverage and Global X Funds 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.