Correlation Between Monster Beverage and Keurig Dr

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

Diversification Opportunities for Monster Beverage and Keurig Dr

MonsterKeurigDiversified AwayMonsterKeurigDiversified Away100%
0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Monster and Keurig is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Keurig Dr Pepper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keurig Dr Pepper 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 Keurig Dr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keurig Dr Pepper has no effect on the direction of Monster Beverage i.e., Monster Beverage and Keurig Dr go up and down completely randomly.

Pair Corralation between Monster Beverage and Keurig Dr

Assuming the 90 days horizon Monster Beverage Corp is expected to under-perform the Keurig Dr. In addition to that, Monster Beverage is 1.17 times more volatile than Keurig Dr Pepper. It trades about -0.05 of its total potential returns per unit of risk. Keurig Dr Pepper is currently generating about 0.05 per unit of volatility. If you would invest  2,918  in Keurig Dr Pepper on November 19, 2024 and sell it today you would earn a total of  87.00  from holding Keurig Dr Pepper or generate 2.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Monster Beverage Corp  vs.  Keurig Dr Pepper

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.15MOB DP5
       Timeline  
Monster Beverage Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Monster Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Monster Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb454647484950515253
Keurig Dr Pepper 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Keurig Dr Pepper are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Keurig Dr is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2929.53030.53131.532

Monster Beverage and Keurig Dr Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.05-4.53-3.01-1.490.01.523.044.556.07 0.050.100.150.20
JavaScript chart by amCharts 3.21.15MOB DP5
       Returns  

Pair Trading with Monster Beverage and Keurig Dr

The main advantage of trading using opposite Monster Beverage and Keurig Dr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Keurig Dr 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 Keurig Dr will offset losses from the drop in Keurig Dr's long position.
The idea behind Monster Beverage Corp and Keurig Dr Pepper 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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