Correlation Between KINDER and Monster Beverage

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

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

Diversification Opportunities for KINDER and Monster Beverage

0.08

Correlation Coefficient

KINDER  Monster Beverage

Significant diversification

The 3 months correlation between KINDER and Monster is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding KINDER MORGAN FIN 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 KINDER 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 KINDER MORGAN FIN 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 KINDER i.e., KINDER and Monster Beverage go up and down completely randomly.

Pair Corralation between KINDER and Monster Beverage

Assuming the 90 days trading horizon KINDER MORGAN FIN is expected to under-perform the Monster Beverage. In addition to that, KINDER is 1.37 times more volatile than Monster Beverage Corp. It trades about -0.16 of its total potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.0 per unit of volatility. If you would invest  5,233  in Monster Beverage Corp on September 23, 2024 and sell it today you would lose (61.00) from holding Monster Beverage Corp or give up 1.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	26.15%
Values	Daily Returns

KINDER MORGAN FIN  vs.  Monster Beverage Corp

KINDER MORGAN FIN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KINDER MORGAN FIN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for KINDER MORGAN FIN investors.

Monster Beverage Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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 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.

Pair Trading with KINDER and Monster Beverage

The main advantage of trading using opposite KINDER and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINDER 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 KINDER MORGAN FIN 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.