Correlation Between Monster Beverage and Compaa Minera

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

Diversification Opportunities for Monster Beverage and Compaa Minera

0.55

Correlation Coefficient

Monster Beverage  Compaa Minera

Very weak diversification

The 3 months correlation between Monster and Compaa is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Compaa Minera Autln in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compaa Minera Autln 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 Compaa Minera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compaa Minera Autln has no effect on the direction of Monster Beverage i.e., Monster Beverage and Compaa Minera go up and down completely randomly.

Pair Corralation between Monster Beverage and Compaa Minera

Assuming the 90 days trading horizon Monster Beverage Corp is expected to under-perform the Compaa Minera. But the stock apears to be less risky and, when comparing its historical volatility, Monster Beverage Corp is 1.96 times less risky than Compaa Minera. The stock trades about -0.27 of its potential returns per unit of risk. The Compaa Minera Autln is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  698.00  in Compaa Minera Autln on October 27, 2024 and sell it today you would earn a total of  21.00  from holding Compaa Minera Autln or generate 3.01% return on investment over 90 days.

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

Monster Beverage Corp  vs.  Compaa Minera Autln

Monster Beverage Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monster Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Monster Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Compaa Minera Autln

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compaa Minera Autln has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Monster Beverage and Compaa Minera

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

The idea behind Monster Beverage Corp and Compaa Minera Autln 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 Transaction History module to view history of all your transactions and understand their impact on performance.