Correlation Between Monster Beverage and Aldel Financial

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

Diversification Opportunities for Monster Beverage and Aldel Financial

0.4

Correlation Coefficient

Monster Beverage  Aldel Financial

Very weak diversification

The 3 months correlation between Monster and Aldel is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Aldel Financial II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldel Financial II 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 Aldel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldel Financial II has no effect on the direction of Monster Beverage i.e., Monster Beverage and Aldel Financial go up and down completely randomly.

Pair Corralation between Monster Beverage and Aldel Financial

Given the investment horizon of 90 days Monster Beverage Corp is expected to generate 14.16 times more return on investment than Aldel Financial. However, Monster Beverage is 14.16 times more volatile than Aldel Financial II. It trades about 0.11 of its potential returns per unit of risk. Aldel Financial II is currently generating about 0.22 per unit of risk. If you would invest  5,172  in Monster Beverage Corp on December 20, 2024 and sell it today you would earn a total of  510.00  from holding Monster Beverage Corp or generate 9.86% 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.  Aldel Financial II

Monster Beverage Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Monster Beverage may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Aldel Financial II

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Aldel Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Monster Beverage and Aldel Financial

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

The idea behind Monster Beverage Corp and Aldel Financial II 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.