Correlation Between Grupo Nacional and Monster Beverage

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

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

Diversification Opportunities for Grupo Nacional and Monster Beverage

-0.15

Correlation Coefficient

Grupo Nacional  Monster Beverage

Good diversification

The 3 months correlation between Grupo and Monster is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Nacional Provincial 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 Grupo Nacional 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 Grupo Nacional Provincial 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 Grupo Nacional i.e., Grupo Nacional and Monster Beverage go up and down completely randomly.

Pair Corralation between Grupo Nacional and Monster Beverage

Assuming the 90 days trading horizon Grupo Nacional Provincial is expected to under-perform the Monster Beverage. In addition to that, Grupo Nacional is 1.51 times more volatile than Monster Beverage Corp. It trades about -0.13 of its total potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.08 per unit of volatility. If you would invest  97,500  in Monster Beverage Corp on September 15, 2024 and sell it today you would earn a total of  8,000  from holding Monster Beverage Corp or generate 8.21% return on investment over 90 days.

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

Grupo Nacional Provincial  vs.  Monster Beverage Corp

Grupo Nacional Provincial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Nacional Provincial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly 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 the company investors.

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 Grupo Nacional and Monster Beverage

The main advantage of trading using opposite Grupo Nacional and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Nacional 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 Grupo Nacional Provincial 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 Stocks Directory module to find actively traded stocks across global markets.