Correlation Between FIBRA Storage and Monster Beverage

Can any of the company-specific risk be diversified away by investing in both FIBRA Storage and Monster Beverage 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 FIBRA Storage and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FIBRA Storage and Monster Beverage Corp, you can compare the effects of market volatilities on FIBRA Storage and Monster Beverage 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 FIBRA Storage with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIBRA Storage and Monster Beverage.

Diversification Opportunities for FIBRA Storage and Monster Beverage

0.76

Correlation Coefficient

FIBRA Storage  Monster Beverage

Poor diversification

The 3 months correlation between FIBRA and Monster is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding FIBRA Storage and Monster Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage Corp and FIBRA Storage 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 FIBRA Storage are associated (or correlated) with Monster Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monster Beverage Corp has no effect on the direction of FIBRA Storage i.e., FIBRA Storage and Monster Beverage go up and down completely randomly.

Pair Corralation between FIBRA Storage and Monster Beverage

Assuming the 90 days trading horizon FIBRA Storage is expected to generate 0.74 times more return on investment than Monster Beverage. However, FIBRA Storage is 1.34 times less risky than Monster Beverage. It trades about 0.17 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.08 per unit of risk. If you would invest  1,579  in FIBRA Storage on September 12, 2024 and sell it today you would earn a total of  208.00  from holding FIBRA Storage or generate 13.17% return on investment over 90 days.

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

FIBRA Storage  vs.  Monster Beverage Corp

FIBRA Storage

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FIBRA Storage are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, FIBRA Storage exhibited solid returns over the last few months and may actually be approaching a breakup point.

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

Pair Trading with FIBRA Storage and Monster Beverage

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

The idea behind FIBRA Storage and Monster Beverage Corp 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.