diversifiable risk of combining Monster Beverage and Aquagold International 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 Aquagold International, you can compare the effects of market volatilities on Monster Beverage and Aquagold International 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 Aquagold International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Aquagold International.
Diversification Opportunities for Monster Beverage and Aquagold International
Pair Corralation between Monster Beverage and Aquagold International
Given the investment horizon of 90 days Monster Beverage is expected to generate 18.79 times less return on investment than Aquagold International. But when comparing it to its historical volatility, Monster Beverage Corp is 4.52 times less risky than Aquagold International. It trades about 0.05 of its potential returns per unit of risk. Aquagold International is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 0.50 in Aquagold International on December 1, 2023 and sell it today you would earn a total of 0.10 from holding Aquagold International or generate 20.0% return on investment over 90 days.
|3 Months [change]
Monster Beverage Corp vs. Aquagold International
Monster Beverage and Aquagold International Volatility Contrast
Pair Trading with Monster Beverage and Aquagold InternationalThe main advantage of trading using opposite Monster Beverage and Aquagold International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Aquagold International 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 Aquagold International will offset losses from the drop in Aquagold International's long position. The idea behind Monster Beverage Corp and Aquagold International 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.
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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