Correlation Between Monster Beverage and La Franaise

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

Diversification Opportunities for Monster Beverage and La Franaise

0.51

Correlation Coefficient

Monster Beverage  La Franaise

Very weak diversification

The 3 months correlation between Monster and 1WE is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and La Franaise des in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Franaise des 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 La Franaise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Franaise des has no effect on the direction of Monster Beverage i.e., Monster Beverage and La Franaise go up and down completely randomly.

Pair Corralation between Monster Beverage and La Franaise

Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 1.05 times more return on investment than La Franaise. However, Monster Beverage is 1.05 times more volatile than La Franaise des. It trades about -0.02 of its potential returns per unit of risk. La Franaise des is currently generating about -0.12 per unit of risk. If you would invest  5,042  in Monster Beverage Corp on October 9, 2024 and sell it today you would lose (17.00) from holding Monster Beverage Corp or give up 0.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Monster Beverage Corp  vs.  La Franaise des

Monster Beverage Corp

Risk-Adjusted Performance

8 of 100

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 uncertain basic indicators, Monster Beverage may actually be approaching a critical reversion point that can send shares even higher in February 2025.

La Franaise des

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in La Franaise des are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, La Franaise is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Monster Beverage and La Franaise

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

The idea behind Monster Beverage Corp and La Franaise des 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.