Correlation Between Monster Beverage and NTG Nordic

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

Diversification Opportunities for Monster Beverage and NTG Nordic

0.72

Correlation Coefficient

Monster Beverage  NTG Nordic

Poor diversification

The 3 months correlation between Monster and NTG is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport 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 NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of Monster Beverage i.e., Monster Beverage and NTG Nordic go up and down completely randomly.

Pair Corralation between Monster Beverage and NTG Nordic

Assuming the 90 days trading horizon Monster Beverage is expected to generate 1.24 times less return on investment than NTG Nordic. But when comparing it to its historical volatility, Monster Beverage Corp is 1.19 times less risky than NTG Nordic. It trades about 0.06 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,470  in NTG Nordic Transport on December 22, 2024 and sell it today you would earn a total of  210.00  from holding NTG Nordic Transport or generate 6.05% return on investment over 90 days.

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

Monster Beverage Corp  vs.  NTG Nordic Transport

Monster Beverage Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Monster Beverage is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

NTG Nordic Transport

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NTG Nordic Transport are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NTG Nordic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Monster Beverage and NTG Nordic

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

The idea behind Monster Beverage Corp and NTG Nordic Transport 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.