Correlation Between Monster Beverage and Vinci S

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

Diversification Opportunities for Monster Beverage and Vinci S

-0.65

Correlation Coefficient

Monster Beverage  Vinci S

Excellent diversification

The 3 months correlation between Monster and Vinci is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Vinci S A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci S A 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 Vinci S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci S A has no effect on the direction of Monster Beverage i.e., Monster Beverage and Vinci S go up and down completely randomly.

Pair Corralation between Monster Beverage and Vinci S

Assuming the 90 days trading horizon Monster Beverage Corp is expected to generate 1.19 times more return on investment than Vinci S. However, Monster Beverage is 1.19 times more volatile than Vinci S A. It trades about 0.02 of its potential returns per unit of risk. Vinci S A is currently generating about 0.02 per unit of risk. If you would invest  4,714  in Monster Beverage Corp on October 4, 2024 and sell it today you would earn a total of  295.00  from holding Monster Beverage Corp or generate 6.26% return on investment over 90 days.

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

Monster Beverage Corp  vs.  Vinci S A

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

Vinci S A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vinci S A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vinci S 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 Vinci S

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

The idea behind Monster Beverage Corp and Vinci S A 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.