Correlation Between Eq Energy and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Eq Energy 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 Eq Energy and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eq Energy Drink and Monster Beverage Corp, you can compare the effects of market volatilities on Eq Energy 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 Eq Energy with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eq Energy and Monster Beverage.
Diversification Opportunities for Eq Energy and Monster Beverage
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between EQLB and Monster is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Eq Energy Drink 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 Eq Energy 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 Eq Energy Drink 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 Eq Energy i.e., Eq Energy and Monster Beverage go up and down completely randomly.
Pair Corralation between Eq Energy and Monster Beverage
Given the investment horizon of 90 days Eq Energy Drink is expected to generate 27.07 times more return on investment than Monster Beverage. However, Eq Energy is 27.07 times more volatile than Monster Beverage Corp. It trades about 0.09 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about -0.41 per unit of risk. If you would invest 0.07 in Eq Energy Drink on January 26, 2024 and sell it today you would lose (0.01) from holding Eq Energy Drink or give up 14.29% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Eq Energy Drink vs. Monster Beverage Corp
Performance |
Timeline |
Eq Energy Drink |
Monster Beverage Corp |
Eq Energy and Monster Beverage Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eq Energy and Monster Beverage
The main advantage of trading using opposite Eq Energy and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eq Energy 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.Eq Energy vs. National Beverage Corp | Eq Energy vs. Celsius Holdings | Eq Energy vs. Monster Beverage Corp | Eq Energy vs. Coca Cola Femsa SAB |
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Check out your portfolio center.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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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