Correlation Between Newage and Monster Beverage

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

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

Diversification Opportunities for Newage and Monster Beverage

-0.31

Correlation Coefficient

Newage  Monster Beverage

Very good diversification

The 3 months correlation between Newage and Monster is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Newage Inc 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 Newage 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 Newage Inc 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 Newage i.e., Newage and Monster Beverage go up and down completely randomly.

Pair Corralation between Newage and Monster Beverage

If you would invest  0.50  in Newage Inc on January 25, 2024 and sell it today you would earn a total of  0.00  from holding Newage Inc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Newage Inc  vs.  Monster Beverage Corp

Newage Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newage Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Newage is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Newage and Monster Beverage

The main advantage of trading using opposite Newage and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newage 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 Newage Inc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.