Correlation Between Monster Beverage and UNITEDHEALTH

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

Diversification Opportunities for Monster Beverage and UNITEDHEALTH

-0.56

Correlation Coefficient

Monster Beverage  UNITEDHEALTH

Excellent diversification

The 3 months correlation between Monster and UNITEDHEALTH is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and UNITEDHEALTH GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITEDHEALTH GROUP INC 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 UNITEDHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITEDHEALTH GROUP INC has no effect on the direction of Monster Beverage i.e., Monster Beverage and UNITEDHEALTH go up and down completely randomly.

Pair Corralation between Monster Beverage and UNITEDHEALTH

Given the investment horizon of 90 days Monster Beverage is expected to generate 1011.17 times less return on investment than UNITEDHEALTH. But when comparing it to its historical volatility, Monster Beverage Corp is 77.36 times less risky than UNITEDHEALTH. It trades about 0.01 of its potential returns per unit of risk. UNITEDHEALTH GROUP INC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  8,006  in UNITEDHEALTH GROUP INC on September 20, 2024 and sell it today you would lose (240.00) from holding UNITEDHEALTH GROUP INC or give up 3.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	86.29%
Values	Daily Returns

Monster Beverage Corp  vs.  UNITEDHEALTH GROUP INC

Monster Beverage Corp

Risk-Adjusted Performance

0 of 100

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 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.

UNITEDHEALTH GROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITEDHEALTH GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, UNITEDHEALTH is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Monster Beverage and UNITEDHEALTH

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

The idea behind Monster Beverage Corp and UNITEDHEALTH GROUP INC 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.