Correlation Between Monster Beverage and Vonovia SE

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

Diversification Opportunities for Monster Beverage and Vonovia SE

-0.56

Correlation Coefficient

Monster Beverage  Vonovia SE

Excellent diversification

The 3 months correlation between Monster and Vonovia is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Vonovia SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vonovia SE 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 Vonovia SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vonovia SE has no effect on the direction of Monster Beverage i.e., Monster Beverage and Vonovia SE go up and down completely randomly.

Pair Corralation between Monster Beverage and Vonovia SE

Assuming the 90 days trading horizon Monster Beverage is expected to generate 6.82 times less return on investment than Vonovia SE. But when comparing it to its historical volatility, Monster Beverage Corp is 1.22 times less risky than Vonovia SE. It trades about 0.01 of its potential returns per unit of risk. Vonovia SE is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,570  in Vonovia SE on October 5, 2024 and sell it today you would earn a total of  396.00  from holding Vonovia SE or generate 15.41% return on investment over 90 days.

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

Monster Beverage Corp  vs.  Vonovia SE

Monster Beverage Corp

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Monster Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, Monster Beverage unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vonovia SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vonovia SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Monster Beverage and Vonovia SE

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

The idea behind Monster Beverage Corp and Vonovia SE 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.