Correlation Between Monster Beverage and Gladstone Land

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

Diversification Opportunities for Monster Beverage and Gladstone Land

0.57

Correlation Coefficient

Monster Beverage  Gladstone Land

Very weak diversification

The 3 months correlation between Monster and Gladstone is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Gladstone Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Land 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 Gladstone Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Land has no effect on the direction of Monster Beverage i.e., Monster Beverage and Gladstone Land go up and down completely randomly.

Pair Corralation between Monster Beverage and Gladstone Land

Given the investment horizon of 90 days Monster Beverage Corp is expected to under-perform the Gladstone Land. In addition to that, Monster Beverage is 1.37 times more volatile than Gladstone Land. It trades about -0.01 of its total potential returns per unit of risk. Gladstone Land is currently generating about 0.04 per unit of volatility. If you would invest  1,855  in Gladstone Land on December 4, 2024 and sell it today you would earn a total of  169.00  from holding Gladstone Land or generate 9.11% 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.  Gladstone Land

Monster Beverage Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Monster Beverage is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Gladstone Land

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gladstone Land has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Gladstone Land is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Monster Beverage and Gladstone Land

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

The idea behind Monster Beverage Corp and Gladstone Land 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.