Correlation Between Monster Beverage and 49327M3E2

Can any of the company-specific risk be diversified away by investing in both Monster Beverage and 49327M3E2 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 49327M3E2 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 KEY 415 08 AUG 25, you can compare the effects of market volatilities on Monster Beverage and 49327M3E2 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 49327M3E2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and 49327M3E2.

Diversification Opportunities for Monster Beverage and 49327M3E2

0.02

Correlation Coefficient

Monster Beverage  49327M3E2

Significant diversification

The 3 months correlation between Monster and 49327M3E2 is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and KEY 415 08 AUG 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEY 415 08 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 49327M3E2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEY 415 08 has no effect on the direction of Monster Beverage i.e., Monster Beverage and 49327M3E2 go up and down completely randomly.

Pair Corralation between Monster Beverage and 49327M3E2

Given the investment horizon of 90 days Monster Beverage Corp is expected to under-perform the 49327M3E2. In addition to that, Monster Beverage is 7.4 times more volatile than KEY 415 08 AUG 25. It trades about -0.06 of its total potential returns per unit of risk. KEY 415 08 AUG 25 is currently generating about -0.15 per unit of volatility. If you would invest  9,955  in KEY 415 08 AUG 25 on October 6, 2024 and sell it today you would lose (40.00) from holding KEY 415 08 AUG 25 or give up 0.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Monster Beverage Corp  vs.  KEY 415 08 AUG 25

Monster Beverage Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 6 (%) 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 February 2025.

KEY 415 08

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEY 415 08 AUG 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 49327M3E2 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Monster Beverage and 49327M3E2

The main advantage of trading using opposite Monster Beverage and 49327M3E2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, 49327M3E2 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 49327M3E2 will offset losses from the drop in 49327M3E2's long position.

The idea behind Monster Beverage Corp and KEY 415 08 AUG 25 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.