Correlation Between Monster Beverage and Brockhaus Capital

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

Diversification Opportunities for Monster Beverage and Brockhaus Capital

-0.71

Correlation Coefficient

Monster Beverage  Brockhaus Capital

Pay attention - limited upside

The 3 months correlation between Monster and Brockhaus is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Brockhaus Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brockhaus Capital 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 Brockhaus Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brockhaus Capital has no effect on the direction of Monster Beverage i.e., Monster Beverage and Brockhaus Capital go up and down completely randomly.

Pair Corralation between Monster Beverage and Brockhaus Capital

Assuming the 90 days trading horizon Monster Beverage is expected to generate 2.85 times less return on investment than Brockhaus Capital. But when comparing it to its historical volatility, Monster Beverage Corp is 1.88 times less risky than Brockhaus Capital. It trades about 0.01 of its potential returns per unit of risk. Brockhaus Capital Management is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,135  in Brockhaus Capital Management on September 20, 2024 and sell it today you would earn a total of  165.00  from holding Brockhaus Capital Management or generate 7.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Monster Beverage Corp  vs.  Brockhaus Capital Management

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

Brockhaus Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brockhaus Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Monster Beverage and Brockhaus Capital

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

The idea behind Monster Beverage Corp and Brockhaus Capital Management 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.